BP is set to sell a new very low sulphur fuel oil (VLSFO) ahead of the 0.50% cap on fuel, operative from January 1st 2020. it said on Monday March 11th.
“BP has developed a marine fuel offer that includes this new VLSFO along with marine gas oil and also high sulphur fuel oil for vessels that are equipped with scrubbers (sulphur filters),” it said, adding that “BP intends to retail the new 0.5 percent sulphur VLSFO globally.”
Meanwhile, the International Energy Agency (IEA) has forecast that high-sulphur fuel oil demand will fall by 60% in 2020, but that marine gasoil demand will more than double.
The IEA said that VLSFO initially would be in limited supply, and quality discrepancies at different ports would mean that shippers were likely to stick to another compliant but pricier fuel, marine gasoil.
In 2020, “demand for HSFO… will fall from 3.5m bpd to 1.4m bpd,” the IEA said in a report, while “demand for marine gasoil would increase from 900,000 bpd to 2m bpd.
The IEA expected VLSFO demand to reach 1m bpd in 2020 and 1.8m bpd by 2024, while marine gasoil demand would peak in 2020, decreasing to 1.8m bpd by 2024.
It predicted that a slight shortfall in marine gasoil supply next year was likely to push up prices by 20%, assuming a significant level of non-compliance
The IEA estimated that about 4,000 scrubbers would be installed by 2020, consuming around 680,000 bpd of fuel oil on average, up from 340,000 bpd in 2019.