LOW SULFUR HFO AND TRANSPORTATION COST
According to IMO expert study, the use of HFO will largely have to be abandoned once the sulfur content limit in fuel decreases to less than 1%. A report by IMO states that approximately 0.5% of the fuel currently used by global maritime traffic is HFO with sulphur content of less than 0.5%. A switch to fuel with a maximum sulphur content of 0.1% will in practice will in practice mean that vessel will have to use gas oil (MGO) as fuel, which is lot more expensive than HFO.
As a result sea freight charges will increase considerably when the stringent regulation on maximum sulphur content takes effect. Fuel cost contributes 30-55% of costs incurred in running of ships. The difference in cost rise of fuel oil can be explained as follows:-
Let us suppose price of HFO with 1.5% Sulphur be Rs X.
Price of HFO with 1% sulphur will be Rs Y = 7-22% more than RsX
Price of HFO with 0.5% sulphur will be Rs Z = 13- 29% more than Rs X
Price of LFO ( Light fuel oil) with 0.1% sulphur will be 73 - 85% more than Rs X
Low sulphur grade fuel oil can be achieved by 2 ways:-
1) HFO can be made from crude oil, which naturally contains less sulphur.
2) High sulphur oil and low sulphur oil are mixed together.
Fuel containing less than 1.5% sulphur which is been used in ECA area is a blend of high sulphur fuel oil and slightly low sulphur fuel oil to get 1.5% sulphur. But to achieve 1% sulphur the mixing ratio will be changed and a greater need of low sulphur fuel oil will be required. However mixing two different grade of oil sometime make them unstable and can cause engine problems. HFO containing less than 0.5% sulphur is obtained from crude oil with a sulphur content that is clearly less than 0.5%. HFO is distillation residual oil, which remains when grades of light fuel oil have been produced from crude oil. Most of sulphur remains in the heavy fuel oil, so sulphur rich crude can not possibly be used to produce HFO containing less than 0.5% sulphur.
Grades of crude oil less than 0.5% sulphur can only be possibly obtained from Daqing(China), Bonny Lt( Nigeria), Brunt ( UK) and WT (USA).
In practice, it is not possible to extract sulphur from heavy oil using current methods, because the metallic impurities in HFO such as vanadium and nickel, despite their low content on the whole prevent the use of the sulphur extraction system employed for the lighter fraction in the oil refinement process for the removal of sulphur in HFO, as they poison the sulphur extraction catalyst.
According to IMO the use of heavy fuel oil grade will mainly need to be abandoned when the sulphur content limit for fuel is less than 1%, necessitating a switch to light fuel grades. An alternative is the use of sulphur scrubbers which will allow the use of current fuel grades.
The conclusion is that the prices of low sulphur fuel grades will be higher than price of high sulphur fuel grades. This will increase running cost for ships operating in current special areas.
As a result sea freight charges will increase considerably when the stringent regulation on maximum sulphur content takes effect. Fuel cost contributes 30-55% of costs incurred in running of ships. The difference in cost rise of fuel oil can be explained as follows:-
Let us suppose price of HFO with 1.5% Sulphur be Rs X.
Price of HFO with 1% sulphur will be Rs Y = 7-22% more than RsX
Price of HFO with 0.5% sulphur will be Rs Z = 13- 29% more than Rs X
Price of LFO ( Light fuel oil) with 0.1% sulphur will be 73 - 85% more than Rs X
Low sulphur grade fuel oil can be achieved by 2 ways:-
1) HFO can be made from crude oil, which naturally contains less sulphur.
2) High sulphur oil and low sulphur oil are mixed together.
Fuel containing less than 1.5% sulphur which is been used in ECA area is a blend of high sulphur fuel oil and slightly low sulphur fuel oil to get 1.5% sulphur. But to achieve 1% sulphur the mixing ratio will be changed and a greater need of low sulphur fuel oil will be required. However mixing two different grade of oil sometime make them unstable and can cause engine problems. HFO containing less than 0.5% sulphur is obtained from crude oil with a sulphur content that is clearly less than 0.5%. HFO is distillation residual oil, which remains when grades of light fuel oil have been produced from crude oil. Most of sulphur remains in the heavy fuel oil, so sulphur rich crude can not possibly be used to produce HFO containing less than 0.5% sulphur.
Grades of crude oil less than 0.5% sulphur can only be possibly obtained from Daqing(China), Bonny Lt( Nigeria), Brunt ( UK) and WT (USA).
In practice, it is not possible to extract sulphur from heavy oil using current methods, because the metallic impurities in HFO such as vanadium and nickel, despite their low content on the whole prevent the use of the sulphur extraction system employed for the lighter fraction in the oil refinement process for the removal of sulphur in HFO, as they poison the sulphur extraction catalyst.
According to IMO the use of heavy fuel oil grade will mainly need to be abandoned when the sulphur content limit for fuel is less than 1%, necessitating a switch to light fuel grades. An alternative is the use of sulphur scrubbers which will allow the use of current fuel grades.
The conclusion is that the prices of low sulphur fuel grades will be higher than price of high sulphur fuel grades. This will increase running cost for ships operating in current special areas.
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