Cockett CEO: ‘Not our job to enforce sulphur cap’

Cem Saral is concerned that compliance could fall to bunker suppliers. Credit: Cockett Marine Oil
Cem Saral is concerned that compliance could fall to bunker suppliers. Credit: Cockett Marine Oil

With less than 18 months to go until the International Maritime Organization’s (IMO’s) 2020 sulphur cap comes into force, Cem Saral, chief executive officer of bunker reseller Cockett Marine Oil, remains concerned – although far from panicked – about the bunker industry’s preparedness for the switchover.

“We have not used the last year to our advantage as an industry to provide clarity on certain issues for our customers,” Saral told IHS Markit. “In terms of key issues, I don’t think we are any clearer now than a year ago.”

He cites the availability of new low-sulphur fuels, as well as their quality and compatibility, as areas that needs attention, but his most immediate concern is enforcement.

There has been some clarity from the IMO on how national authorities should regulate the sulphur limit, yet there is still no system that enshrines how enforcement should look globally and that will enable the industry to identify those players that do not abide by the rules.

Saral’s concern is that this could lead to the burden of enforcement falling to bunker suppliers.

“There is no compliance or enforcement regulation that limits sell-side what to put on the ship. The compliance burden is on the consumer,” he says, referencing an IMO regulation set to come into force in March 2020 that will ban high-sulphur heavy fuel oil (HFO) from being carried on vessels, unless they are fitted with abatement technology called scrubbers.

Putting bunker providers in the position of enforcing the sulphur cap, and deciding whether to provide HFO to ships that have requested it, “will be a very personal decision,” he said, one that bunker providers would rather not have to make. “The commercial engagement will have to decide whether they will be comfortable trading, knowing that the vessel does not have a scrubber.”

And what if Cockett itself is asked to supply HFO to a vessel that does not have a scrubber? “We are working with closely with the industry, authorities, and our shareholders to redefine how we engage in post-2020 affairs,” he said. “We are respectful of emission controls, including IMO 2020, and our goal is to comply with them. In terms of what types of measures and control we can implement, it’s too soon to say what they will be.”

Nevertheless, he believes it is unrealistic to assume all players will comply with the rules, including shipowners and bunker providers, although they are less likely to chance it in larger, well-regulated hubs than in smaller ones.

Turning to low-sulphur fuels, Saral believes that owners will initially switch to marine gas oil (MGO) because they already have experience of using it. But as new compliant fuels are introduced and people become familiar with their quality and compatibility, their role in the fuel mix will become more prominent. This will vary depending on the location, as it may not make commercial or logistical sense to supply new fuels to smaller non-hub ports.

The lack of knowledge about the composition of these new blends means more information is needed on how to handle them, amid concerns that mixing them could create stability issues. “We need a few more months for the industry to provide clarity,” Saral said. “Sellers are waiting to offer them in the market openly. I am sure there are select sea trials taking place for certain producers and consumers who will know more about specific compliant products.”

But he remains sceptical at the suggestion that the industry might take comfort from the recent announcement from the International Organization for Standardization (ISO) that the ISO 8217 bunker regulation will apply to these new low-sulphur products. “If you generalise the qualities that a typical engine needs, then obviously new compliant fuels will meet ISO 8217, yet it doesn’t look like any new compliant fuel will be close to typical RMG that we are consuming today,” he said.

Yet until the ISO has more clarity on what new low-sulphur fuels will look like, “It is basically a chicken-and-egg situation,” he noted, as they will be unable to issue a new ISO guide. The result is likely to see a series of clauses added to ISO 8217 that will provide some guidance to the industry.

The other main compliance method – scrubbers – was initially shunned by owners on cost grounds, but demand has recently grown significantly. “We see sustained uptake for retrofits on larger vessels to make them commercially viable,” Saral said, citing cases of owners being pressured into installing scrubbers by operators who have made it a condition of renewing a time charter agreement.