Low Sulphur Fuels - Some Practical Implications

The requirements for low Sulphur fuels form part of Annex VI of the regulations we know as MARPOL 73/78 (its full title is the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978). Annex VI was actually adopted by the IMO as far back as 1997 but, like all IMO regulations, only comes into force 1 year after it is ratified by a certain number of States having a certain percentage of the world's tonnage. This occurred on 18^th May 2004 when it was ratified by Samoa, with the regulation coming into force on 19^th May 2005. 

Annex VI covers the prevention of air pollution from ships. The problem being that when fuels are burnt in engines the gasses they produce contain Sulphurous Oxides (known as SOx) and Nitrous Oxides (known as NOx) and these play their part in environmental pollution, acid rain etc. 

One of the main reasons why shipping is now being targeted is not that ships are putting out more of such polluting gasses but that land based industries have been subjected to such regulations for some time and have therefore been decreasing their emissions, which means emissions from ships form a bigger percentage. 

Annex VI sets a global limit on the Sulphur content of marine fuels of 4.5%. This superseded the limit of 5% in the international fuel standard, ISO 8217 and the latest update of the standard, published in November 2005 (so now known as ISO 8217: 2005) now has a global limit of 4.5%. 

Annex VI also contains provisions for what are know as "SOx Emission Control Areas" (or SECAs) which have much more stringent controls on sulphur emissions and limit the sulphur content of fuels to 1.5%. 

Annex VI does allow for the fitting of exhaust gas cleaning equipment (scrubbers and the like) and some of these are currently being tested.

So what are the practical implications of this?

1. Global Limit

• Marine fuels supplied worldwide have an average Sulphur content of between 2.5% and 3.0% with normally only 0.5% of all fuels supplied containing over 4.5% Sulphur.
• In fact the latest figures from IMO show that over a 3 year rolling period between 2003 and 2005 the average of all fuels sampled was 2.7% with only 0.3% over the 4.5% limit.
• So the global limit will have very little practical effect on ships.

2. SECAs

• The first SECA was the Baltic Sea and this came into force 1 year after Annex VI, i.e. on 19^th May 2006.
• The North Sea is the next SECA and this will come into force on 22^nd November 2007.
• The first point to appreciate is that Annex VI refers to Fuel Oil and makes no differentiation between residual fuel oils (i.e. IFO) and distillate fuel oils (i.e. MDO).
• None of the grades of residual fuel in the present IFO 8217 standard have a limit on Sulphur which would comply with the limit of 1.5%. So if a vessel wanted to continue using residual fuel, it would have to have a separate low Sulphur fuel oil and would have to properly segregate it.
• In fact the only grade of fuel in the ISO 8217 standard which would meet the SECA limit is DMA or gas oil, both the normal grades of MDO, DMB and DMC, have a limit on sulphur of 2.0%.

3. Segregated Storage

• The problem of different grades of fuel could mean segregated storage tanks but it also raises the possibility of dual pumping systems etc. At the moment most ships do not have enough individual tanks to be able to keep some tanks just for low sulphur fuel for those few occasions when a vessel will be in a SECA.
• Charterers are also raising problems because if a vessel keeps certain tanks just for low sulphur fuel, they are not available to the Charterer to use for bunkering in low cost ports. Also if these segregated tanks are relatively small, they may not have the capacity to take the minimum quantity of a grade imposed at some ports with financial implications for Charterers.
• One way round the problem of dual pumping systems would be to change over to low sulphur fuel early enough so that the transfer system and daily use tanks are flushed through before the vessel enters a SECA but this would have to be planned well in advance of entering a SECA.

4. Cylinder Oils

• One of the more serious points to bear in mind is that the cylinder oil used in large slow speed diesel engines is highly alkaline to counteract the acidic conditions produced when burning the more normal high sulphur fuel oil. The affect of using low sulphur fuel could lead to the situation where excess alkalinity occurs.
• The grade of cylinder oil should therefore be matched to the sulphur content of the fuel and both Owners and engine manufacturers may have to consider the possibility of dual cylinder oil systems.
• Recent experience has shown some vessels suffering serious problems when using low sulphur fuels with their normal grade of cylinder oil for extended periods. There has been very little research done on the issue and there are two schools of thought. Firstly it is thought that excess alkalinity could be as corrosive as excess acidity. A second problem is thought to be that the alkalinity in cylinder oils is due to an additives package and it is thought that with the reduced sulphur content, these additives are not used up and the remnants of them build up around the top of the piston above the top piston ring. This build up then wipes the cylinder oil off the surface of the cylinder liner, leading to metal to metal contact between the liner and the piston rings and the consequent rapid wear of both of them.

5. Compliance

• Annex VI puts the burden on bunker suppliers to supply fuel which conforms with the sulphur limits but the burden of demonstrating compliance will be on ships and their Owners. The requirements to cover this aspect include retaining Bunker Delivery Receipts, which have to show the sulphur content, of all fuels received for 3 years and for the taking of what will be known as "Regulatory or MARPOL Samples" so that, should a port authority require it, it can be tested to prove compliance. These samples need to be retained for at least 12 months.
• What is of interest is that IMO has decided that this sample should be taken by one of three methods, which include the normal continuous drip method, at the receiving vessel's bunker inlet manifold i.e. not on the bunker barge.
• Owners will also have to ensure that not only do the crew properly segregate low sulphur fuel but that they also properly document it and the change over procedure so that the evidence is available. The best place to document this will be the vessel’s log books so the question arises: will these have to be retained on board for the same 3 year period as the delivery receipts?
• Retaining the documentary evidence and MARPOL samples for the required periods may require dedicated storage such as a separate locker. 

6. Availability & Cost

• The information presently available in the market would indicate that availability of low sulphur fuels is generally not a problem but there are regional variations. In Europe availability has not been a problem but in for instance Singapore there is only 1 supplier offering it with a minimum of 400 mt per delivery. One point to bear in mind with the new North Sea SECA about to come in is that bunkering low sulphur fuel in Europe may be too late with the time required to flush through a vessel’s systems so availability in other parts of the world may become an issue.
• The cost premium for low sulphur fuels also varies but presently this is about $20.00 to $50.00 per mt over and above the cost of normal fuel oil.

7. Regional Measures

• In addition to Annex VI, the European Union has also brought in its own regulations, possibly motivated by the delay between Annex VI being adopted by IMO in 1997 and it coming into force in 2005. The EU measures are in line with the regulations concerning SECA's but include additional rules for distillate fuels. The EU directive covers the use of distillate fuel within Member States national waters, i.e. within the 12 mile limit, or alongside berths and this initially allowed a maximum Sulphur content of 0.2%. Since August 2006 the 0.2% sulphur limit applies only to MGO used in EU territory (provided its viscosity falls within the range defined for DMX and DMA grades under ISO 8217). For DMB and DMC grade MDO, however, the 0.2% sulphur limit in EU territory has been changed to a limit of 1.5% sulphur. This change was implemented to allow vessels to use MDO in order to comply with the SECAs, in case 1.5% sulphur heavy fuel oil is unavailable. From the 1 Jan 2008 year the MGO limit will reduce to 0.1% and from 1 Jan 2010 the same limit will apply to ALL marine fuels used by ships at berth and in inland waterways (save for ships spending less than 2 hours at berth according to published timetables, for hybrid sea-river vessels while they are at sea, and for vessels cold-ironing). 
• Everyone must be aware of the need for environmental protection and shipping must play its part in this. The way to achieve this should be through global measures under the auspices of IMO. Regional measures would create confusion and disruption for shipping and may even be counter-productive. Europe may be the first to take such regional measures but you can be sure they will not be the last.

With thanks to Ian Green of Casebourne Leach & Co for preparing this article.