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SECA - report informs on current status of the actions by ship owners and ports

Date: 13/01/2014

In the European SECA -  Sulphur Emission Control Area - the highest permitted sulphur content of fuel will fall to 0.1 % from 1st of January 2015. Therefore a ship owner must switch to LSMGO (Low Sulphur Marine Gas Oil), LNG, methanol or another fuel with the required sulphur level. Alternatively, the ship can be equipped so that it is capable of reducing the sulphur in the exhaust gas to an equivalent level.
ESN, the Way Forward –project has gathered information on impacts of the regulation: status of new technology taken into use or in planning phase by ship operators and ports within SECA area, as well as on governmental plans and aid schemes.  
The effort to comply with the regulation is enormous. On average about 5 000 ships trade in the SECA. More than 2 000 ships stay in the SECA 100 % of their operating time. As of today, the large majority (85 %) of the fuel consumed is HFO (Heavy Fuel Oil). The fleet of large container and ro-ro ships trading 100 % of their time in SECA counts about 150 ships.
According to our survey most of the ship owners plan to switch to MGO in 2015. Marine fuels represent a minor share of the overall European diesel market. Therefore it will be possible to meet the additional demand for LSMGO, which is estimated to be 10-12 million tonnes. The long term price difference between LSMGO and HFO is expected to stay at today’s level of US$ 300-400/tonne if the current oil price remains stable.
In November 2013, according to the survey to ship owners and manufacturers of abatement technology, there exist approximately sixty scrubber installations and orders in total to both retrofits and newbuildings. The knowledge related to real operational circumstances has been fairly scarce but along with the new installations on board the data concerning the effectiveness of scrubbers, which is measured by SOx removal, is increasing.
The LNG supply chain is currently being built. Based on our findings there are LNG bunkering facilities only in few ports at the moment, but a majority of the ports - major hub and satellite ports - have plans to offer these facilities from 2015 onwards.  The current challenge regarding LNG is that the price of LNG is not competitive and the distribution is too costly due to the low LNG bunkering volumes.
At today’s offered LNG prices, ship owners hesitate to make conversions or order new ships with LNG. There are therefore only few LNG-powered ships outside Norway, where ship owners benefit from investment support from the Norwegian NOx-fund. The world-wide LNG-powered fleet only counts 42 ships with additional 39 ships on order (October 2013). Most ships on order are either Norwegian or intended for trades outside the European SECA. 
For newbuildings, LNG is more favourable and increasingly larger share of the new ships will use LNG. Det Norske Veritas expects that the current European LNG-fleet will grow from 66 ships now (including ships on order) to 400 ships in 2020. It is expected that economies of scale will have an effect gradually, and the price of LNG and the logistic costs will decrease making LNG an attractive alternative to HFO towards 2020.  
Support or incentives for the use of new technologies or practices is provided currently only by Finland and Norway, as well as by EU programmes, such as Trans-European Transport Network, TEN-T.
Read the full report in this link.

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