The chief executive officer (CEO) of
World Fuels Services,
Michael Kasbar [pictured], has said that Thursday's decision to implement a 0.5% cap on the sulphur content in marine fuel "turns the whole industry upside down", but is confident that his company will be able to "continue to stay in the game and just roll with the punches".
Speaking during the company's third-quarter earnings call on Thursday, Kasbar reflected on the ruling, giving his opinion on how it would affect the industry.
IMO's decision to opt for 2020 instead of 2025
Commenting on the reason for the International Maritime Organization's (IMO) decision to implement the global sulphur cap in 2020 instead of 2025, Kasbar said: "We just had the Paris Accords, so I think it would have been received as extremely, politically, unfavourable and outside of where the trend is now to not approve that for 2020."
Product availability and product mix
With an increase in demand for 100% distillate fuels and high percentage distillate-based blends from 2020, varying refining capacities and a wide range of regulation-compliant products - including alternative fuels such as liquefied natural gas (LNG), liquefied petroleum gas (LPG), methanol, ethane and biofuels - available globally, Kasbar said: "It's going to become more complex, you're going to have global imbalances in terms of various products."
Referring to the global product mix in 2020, Kasbar remarked: "It's really going to be all over the place, it's going to be all over the board."
Ship owners
Commenting on how IMO's decision will affect shipping companies, Kasbar said: "Ship owners are going to have lots of different decisions to make on investments and price differences, the availability of products."
LNG bunkering
Referring to how the company's experience in the natural gas market would help it in the LNG bunkering market, Kasbar said: "So LNG, we know a hell of a lot about that. We are moving a lot of natural gas. We have invested into liquefaction construction."
Costs
In reference to the costs involved for ship owners to install scrubbers (and the resulting payback by using lower-priced fuel), the infrastructure costs to establish an LNG bunkering network worldwide, the costs for suppliers to produce high percentage distillate-based blends with fuel oil, Kasbar said: "So you're going to have some increase in cost without question. A number of people depending on where they are and going to take different solutions. From scrubbers there is obviously a payback, you've got infrastructure in terms of LNG, you're going to have some blended fuel oil, so a lot of that is going to come into the market."
"The fact remains that it's still a tough environment and we need to be a hell of a lot more cost-conscious today than we ever had been before. So we've got our work cut out for us."
Change and sustainability
Despite the challenges ahead, Kasbar was positive about how World Fuel Services would be able to cope with the new fuel regulation.
"We spend a lot of time and energy bringing folks together so that we can really leverage all of the internal capabilities. We really look forward to these types of changes, because it really allows us to show what we can do. So change is our friend, and I think it's a good day for the planet and it's a win for sustainability; we're all about sustainability in our company. All of that basically is fundamentally existing for us because of our deployment and the diversity of us being able to bring together different solutions," Kasbar said.
