the case for continued use of residual products to fuel...

THE INTERNATIONAL BUNKER INDUSTRY ASSOCIATION

10 May 2007 Bunker Summit 1

The Case for Continued use of

Residual Products to Fuel Ships

Presented by

Ian Adams

Secretary General

INTERNATIONAL BUNKER INDUSTRY ASSOCIATION



Introduction

• The current status

• BLG 11

• IBIA Position

• Reasoning behind IBIA Position

• Conclusions



The International Maritime

Organization



MARPOL Annex VI - Status41 Countries representing 72.31% of world tonnage

have ratified the Convention

Azerbaijan Bahamas Bangladesh Barbados Belgium Benin

Bulgaria China Cook Islands Croatia Cyprus Denmark

Estonia Finland France Germany Greece Italy

Kiribati Japan Latvia Liberia Lithuania Luxembourg

Marshall

Islands

Netherlands Norway Panama Poland Republic of

Korea

Romania Saint Kitts

and Nevis

Samoa Saudi

Arabia

Singapore Slovenia

Spain Sweden Tuvalu United

Kingdom

Vanuatu



IBIA @ IMO

• Issues at BLG 11

• Material Safety Data Sheets (MSDS)

• Revision of MARPOL Annex VI and the NOx

Technical Code

• Ship to Ship Transfers (STS)



Revision of MARPOL Annex VI

BLG 11 held 16 – 20 April 2007

Considered 6 options

• Option A – Status Quo

• Option B – Change the SECA requirements

• Option C – Change to Distillates

• Option C2 – As C but with Alternative Mechanisms

• Proposal by USA

• Proposal by BIMCO




• Option A – Reference Baseline

• Option B – Change to SECA Requirements

• Option B1 – Proposal by the USA

• Option B2 – Proposal by BIMCO



BLG instructed Working Group to reduce the Options



SQUARE BRACKETS[………..]

• NOT AGREED

• FOR DISCUSSION

• PROPOSED



IBIA Position

• Goal Based Solutions

» Low Sulphur HFO

» Scrubbing

» Distillates

• Holistic Approach

• Sustainable



Requirements

• 200 million tonnes of Fuel Oil per annum

• 50 million tonnes in Europe alone

• Currently Europe imports 33 million tonnes of Distillates



Low Sulphur Fuel Oil

• Fuel Oil is consumed in other industries

• Bunker demand is one third of total demand

• High Sulphur demand is greater than the entire Low Sulphur

demand in other industries



Scrubbing

• Removes SOx and PM

• Limited effect on NOx

• Allows use of High Sulphur Fuel Oil even in sensitive areas

• “One off” CO2 production



Refinery Capacity - Distillates

• Europe already unable to supply the demand for distillates hence imports

• Would require 50 refinery units to be converted to satisfy the demand

• Cost to the refining Industry US$ 38 billion 1

• Engineering and Construction resources not available

1 Source: IPIECA submission to BLG 11



Meeting the Demand

• Two ways to do it:-

• Increase Conversion (destroy the residual

stream)

• Process more crude



Process More Crude

• Would require 600 million tonnes of crude (equal to the entire

output of Saudi Arabia)

• Would cause massive disruption to other markets due to over

production



Holistic Approach?

• Distillates would reduce Ships emissions of SOx

• Distillates would have an unknown effect on Ships emissions of NOx and

Particulate Matter (PM)

• Use of Distillates MAY increase PM < 2.5 microns

• Use of Distillates would decrease CO2 from ships

• CO2 from refineries would increase (net increase of approximately 20 million

tonnes per annum)



Sustainability

• Crude is a finite resource

• Light products produced to satisfy consumer demand (cars,

planes, trucks, trains etc)

• Marine diesels extract energy from residual fuel oil with the

lowest production of CO2



Conclusions

• We (the industry) NEED to be engaged in the discussions

• One “size” does not necessarily fit all

• The regulators MUST be lobbied to enable them to make

informed decisions

• IBIA is ABLE to co-ordinate the effort on a global basis

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