Chevron Readying IMO-Compliant Fuel

Chevron plans to bring an IMO-compliant 0.5% sulphur shipping fuel blend to the market by the end of the third quarter, a company representative said on Wednesday.

Ships will be required to use fuels with a sulphur content of no more than 0.5% from the start of 2020, down from 3.5% currently, under International Maritime Organization (IMO) rules aimed at cutting air pollution.

"If the shipping company is willing to try it out now we can make it available, but not for continuous purchase," Chevron Fuels Technologist Monique Vermeire told Reuters at an industry conference.

"I think it will be available (for the market) by the end of the third quarter," she said.

Only ships fitted with sulphur-cleaning devices, known as scrubbers, will be allowed to continue burning high-sulphur fuel, under IMO regulations.

While major fuel bunkering ports such as Singapore, Fujairah in the United Arab Emirates and Rotterdam in the Netherlands are expected to have compliant-fuel supplies, analysts and shipping firms point to concerns over what happens at smaller ports.

Ship owners fear that mixing different batches of very low sulphur fuels risks creating a level of sediment which could damage engines.

With less than seven months until the new rules apply, there is still a lack of certainty about the change, including regarding pricing.

"I would like to see global standard ISO certificated low sulphur fuel oil," Ivar Myklebust, chief executive of Norwegian shipping firm Hoegh Autoliners, told a panel discussion during a shipping conference in Oslo.

"Yes, we understand we need to pay more, but what is the reference?" he said.

Without a standard certification, shipping counterparts have trouble entering contracts and cannot lock in fuel costs on the futures market.

Oil majors BP and Royal Dutch Shell have also said they are developing very low sulphur fuels to meet the 0.5% requirement.

By Victoria Klesty