Looking near and far trying to make sense of it all

In this Comment piece, we look at things both near and far in the timescale of ship operations.

Looking near term first, we now have less than 18 months before 1 st January 2020, which should be etched in everyone’s minds as the date that the 0.5% low sulfur cap kicks in.

Despite the date looming, there is still a significant amount of uncertainty being expressed by the shipping industry as to the best way to go about it. Of course, it is up to individual shipowners and operators to tackle this as they see fit.

As has been written many times there are four basic methods of reaching this goal
- the use of exhaust gas cleanng systems (scrubbers), low sulfur fuel oil (distillates), LNG as a fuel, or simply do nothing at all.

At last month’s SMM, the situation was hotly debated at a meeting, involving IMO head Kitack Lim, ICS supremo Esben Poulsson and Frank Starke, Caterpillar CEO.

They all agreed that there would be no postponement, despite the many challenges as yet unsolved. Some of the solutions should be hammered out at this month’s MEPC 73 meeting. The ICS was due to publish technical papers on the subject as this issue went to press and has since issued a guideline on preparing for 2020.

Lim said that we cannot avoid the challenges and called for more dialogue with all the stakeholders on the questions of ship safety, fuel availability, supply problems, Port State Control issues to identify the critical issues. The challenges must be finalised by the middle of next year, he stressed.

He called for a substantial action plan to be agreed this month involving the IMO committees, NGOs and the industry itself.

He said the transition should be undertaken step by step.

Starke also confirmed that there would be no ‘grandfathering’ and said it would be a ‘one day change’ relevant to all ships. He said this should be approached on a system basis and meet the challenges, some of which will only become evident after the regulation has entered into force.

Poulsson countered that the shipping industry was being bombarded with issues, such as the Ballast Water Convention and the low sulfur edict and no doubt other things as well. “We do not know what the cost will be,” he said.

He also said that the industry does not know what technical solutions will be needed referring to the 2050 deadline of zero emissions.

Starke called it a revolution not an evolution.

Long term future

Looking further ahead, on much the same theme, DNV GL looked into its crystal ball last month and came up with a report, ‘Energy Transition Outlook’, which attempted to give a global and regional forecast on energy needs and their sources to 2050.

In a nutshell, the report said that by 2050, the primary energy mix will be split 50:50 between fossil and non-fossil fuels and that primary energy supply will peak around 2032, owing to rapid energy efficiency gains. Oil demand will peak in the 2020s, however, new oil fields will still be required to 2040 to replace depleting reserves.
For tankers, it doesn’t make pleasant reading, saying that the crude oil fleet will peak at around 30% larger by 2030 and then decline by 30% to 2050. The products/ chemical tanker fleet is forecast to decline by 8% by the middle of this century.

DNV GL pointed out that transport was the largest oil consumer and the advance of vehicle electrification will speed up, hence oil demand is set to peak in the 2020s. Manufacturing comes second to transport in oil consumption, including feedstock, which will also peak in the late 2020s.

Regional patterns are changing with both Europe and the OECD countries experiencing an oil consumption reduction, which is forecast to continue. China’s oil consumption will peak 2030, followed somewhat later by India.
Production will continue to be dominated by the Middle East and North Africa, with Latin American production increasing, while northeast Eurasian and North American levels will remain stable until the mid-2030s before declining.

Seaborne crude oil trades are expected to plateau around 21% higher than today within the next decade, then going down after 2027 dropping to around 6.5 trill tonne/miles in 2050, having peaked at about 11.5 trill tonne/miles towards the end of the 2020s.

To build a tanker to last until 2040, designers/owners and operators need to be thinking about the future now to be able to order the vessel by 2020 or before, thus giving it a 20-year lifespan.

Is there a fundamental redesign on the cards? Certainly in terms of increased operating efficiency to meet the new regulations, both international and national.

Rest assured, Tanker Operator will be keeping abreast of developments as they happen.



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