On 1 January 2020, the International Maritime Organization (IMO) imposed a sulfur cap of 0.5% m/m in marine fuel oil. This is a massive reduction from the current levels of 3.5% m/m and applies for ships operating outside emission control areas (ECA).
What does this mean for West Africa?
The West African bunker fuel markets could struggle with the implementation of the 0.5% sulfur cap on marine fuels in 2020 due to extensive competition from Mediterranean ports and the question of marine fuel quality, according to analysts and trading sources.
Post-2020 there will be greater concern about the quality of the product, rather than just the price so ship-owners will be nervous about where they buy their bunkers and this counts greatly against West Africa. However, we believe there could be light at the end of the tunnel as we expect activity in West Africa to pick up in 2020 as the global appetite for sweet crudes will be greater, particularly for crude grades out of Nigeria and Angola. In five years there could be around 500,000-1 million b/d of new refining capacity coming online in West Africa and the bulk of these refineries will be processing low sulfur crudes, which make for good quality low sulfur marine fuels.
On 1 January 2020, the sulfur dioxide emission standard tightens to limit the emissions to burning the equivalent of fuel with sulfur content less than 0.5%
3.5 wt% ↓ 0.5 wt%
sulfur cap on marine fuels in 2020
How we can navigate
We believe that the best way to prepare for IMO 2020 is to make sure that your business is able to mitigate risks effectively. As one of the few well structured bunkering companies operating in the WAF region, we are uniquely qualified to aid you in navigating these uncertain waters. Our team of professionals will be there to guide you through protecting against price volatility without hedging, and coordinating contracts to ensure the disruption to your supply chain is as minimal as possible.