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Wednesday, July 18, 2018

BUNKER SUPPLEMENT NO. 9 - SEPTEMBER 2000

THE EU BUNKER FUEL SULPHUR DIRECTIVE 1999/32/EC AND AN EARLY EXAMPLE OF PROBLEMS AND RESPONSES

The motive for the new Sulphur “regulations” is an attempt by the European Communities to reduce acidification (e.g. acid rain) to the environment, a motive which is both relevant and commendable from an environmental perspective. The relevant EU Directive was published on 26 April 1999 for enforcement from 1 July 2000.  For reference purposes, the actual and relevant content of this Directive was discussed in some detail in last month’s bunker supplement. 

As suspected, this Directive has caused concern within the Maritime community not only with regard to its application but also with regard to its impact upon vessel operations.  One such example reported to INTERTANKO relates to a fleet of chemical tankers operating within EU waters. 

In 1998 the owners took the decision to operate the fleet by changing their main engine fuel type from IFO 180 cst (RME/F 25 with 3.5% sulphur content) to MDO (with 1% sulphur content).   This switch to better quality fuel (of lower sulphur content) has proved to be successful in achieving the owners’ goals of reducing maintenance costs.  However, as the sulphur content of MDO in the ISO 8217 specification table 1 is quoted as 1.0% maximum for the best quality – DMX - the Owners had to find a source of new bunker fuel with the lower sulphur specification as required by the EU Directive – 0.2% given their trading pattern/area.   

Notwithstanding the publication date of the Directive and the contents of both Article 4 paragraph 1 and Article 10 of the Directive, the INTERTANKO member’s investigation of the market to gain the required bunker quality resulted in no bunker supplier being able to supply the bunker.  The alternatives open to the Owner are to either purchase MGO with a 0.2% maximum sulphur content, which would cost an additional U.S. $ 20 per metric ton, or revert back to using IFO with an average sulphur content of 3.5%.   

INTERTANKO investigated this reported circumstance and perceived difficulties with the European Commission.  It is apparent that the Commission is aware of the type of problem reported above and are discussing internally methods to amend the current Directive.  Further, although the compliance date for the Directive was 1 July 2000, the Commission was not expecting Member States to prosecute any departures from the requirements of the Directive due to the many outstanding issues relating to the Directive.  In the meantime the Commission is trying to adopt an approach that would encourage rather than discourage the use of distillate fuels rather than heavy fuel oils. 

With regard to the case in question, it was considered fairly safe to continue using the 1% MDO grade rather than taking the regressive step back to the higher sulphur HFO.  The amendments and corrections to this Directive are to be expected early next year. 

As an epilogue to this particular issue it is interesting to note the content of the relevant Articles quoted above in the light of the lack of supply of the required and specified fuel quality.  Article 10 states that “Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive before 1st July 2000.  They shall immediately inform the Commission thereof.”  Article 4 paragraph 1 states “Member States shall take all necessary steps to ensure that gas oils, including marine gas oils  (read MDO) are not used within their territory as from: - July 2000 if their sulphur exceeds 0.20% by mass,” 

Assuming that the laws within the 15 Member States are in place, then it must be the case that refiners are having difficulty in producing the required quality to meet the demand.   This can be fully understandable when production and blending streams have to be changed over a relatively short period of time.  

INTERTANKO will follow developments in this issue and report.

For further information please contact Tim Gunner or Dragos Rauta