New maritime measures threaten to rock oil industry’s boat

The International Maritime Organization (IMO) will make a significant change to the maximum allowed sulfur content of marine fuel consumed on open oceans beginning January 1, 2020. (File photo/AFP)
Updated 04 March 2019
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New maritime measures threaten to rock oil industry’s boat

DUBAI: The clock is ticking down on the introduction of a piece of regulation that — if not managed properly — threatens to bring turmoil to global trade and energy markets.
By the end of the year, the world’s maritime industry is expected to have put in place new anti-pollution measures imposed by the International Maritime Organization, the regulator for the global shipping industry. Known as IMO 2020, the new regulations aim to reduce the amount of high-sulfur ingredients in “bunker” fuels — the low-quality oil products on which most of the 80,000 commercial vessels that ply international trade routes run.
The proposed measures and the deadline have been looming since they were first proposed 10 years ago, but the industry is only slowly waking up to the repercussions. The world’s shippers have to either move to new cleaner fuels — with a maximum 0.5 percent sulfur mix — or install scrubbers onto each vessel in the world.
With an estimated cost of $2 million to $5 million per vessel, the cost to the shipping industry will be immense. For the Arabian Gulf oil industry, the change threatens to add to refining costs for its traditional high-sulfur product.
Some oil analysts reckon that could add $7 to the price of a barrel of oil. Taken together with the price of installing scrubbers, the total cost of IMO 2020 could be as much as $1 trillion over five years, according to S&P Global Platts Analytics, the energy experts.
The price of oil is always a sensitive issue. The US President Donald Trump has made cheap gasoline a central policy requirement for his populist supporters. In Europe, much of the recent street protests in France was prompted by government-imposed increases to the cost of oil products. Policymakers are learning that they tinker with the oil price at their peril.
Environmental lobbyists say the air quality around ports and refineries is among the dirtiest on the planet, so the new measures make sound environmental sense. But there is another challenge to global trade patterns associated with IMO 2020.
Some of the biggest ports in the world, like Singapore, have signaled that they will impose the new measures stringently. But there is no guarantee others will be so conscientious. Bunkering charges are a large element of shippers’ costs, and less meticulous operators might use the new regime to try to win market share. There are any number of ports in Asia that would like to take top spot from Singapore, and might not really care about how they do that.
There are question marks too over how effectively the new rules will be policed. Big Oil, the world’s leading energy companies, is increasingly under pressure from ethical investors determined to enforce new environmental standards.
Others, like Saudi Aramco, the biggest oil company in the world, have voluntarily introduced new environmental measures. Saudi oil is already one of the cleanest forms of hydrocarbon product in the world, according to recent scientific studies.
But the same cannot be said for all the operators in the energy and maritime business. There is a suspicion in the industry that less scrupulous operators will avoid the new measures and seek to unfairly take business from their more ethical rivals. The ability of the IMO to enforce the new rules even-handedly is also in doubt.
It is not all gloom. Experts in the refining business believe the industry can pretty quickly adapt plants to turn out the new low-sulfur fuel. Ports like Fujairah, on the Indian Ocean shoreline of the UAE, are already offering low-sulfur fuels, and expect to see a big increase in business in the course of the year.
There has been a recent surge in the installation of scrubbers, especially on very large container vessels and tankers. Much of the work of converting them to cleaner standards can be done by on-board engineers while the vessel is at sea, minimizing the disruption to normal business.
The industry may also find it has more time than it thinks. Trump, opposed to climate change theory and environmental regulation, is reported to be considering requesting a delay in implementing the changes. If the US refuses to play ball in IMO 2020, the new regulations could well be stillborn.


‘Results’ needed from Myanmar over Rohingya return: UNHCR head

Updated 24 May 2019
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‘Results’ needed from Myanmar over Rohingya return: UNHCR head

  • A UN fact-finding mission called for Myanmar’s top generals to be prosecuted for “genocide”
  • Myanmar pejoratively labels the Rohingya as “Bengali,” implying they are illegal interlopers

YANGON: Myanmar must “show results” to convince Rohingya refugees to return, the UN’s High Commissioner for Refugees Filippo Grandi said Friday at the end of his first visit to Myanmar since the crackdown against Rohingya Muslims in 2017.
A brutal military campaign in western Rakhine state forced some 740,000 Rohingya over the border into Bangladesh.
Around one million Rohingya now languish in sprawling refugee camps from various waves of persecution.
A UN fact-finding mission called for Myanmar’s top generals to be prosecuted for “genocide” and the International Criminal Court (ICC) has started preliminary investigations.
During his visit Grandi spoke with both Rohingya and ethnic Rakhine Buddhist communities in Maungdaw and Buthidaung in northern Rakhine, the epicenter of the violence.
He also held discussions with officials in capital Naypyidaw, including civilian leader Aung San Suu Kyi, describing all talks as “constructive.”
“My message is: ‘please accelerate’, because it has been very slow in the implementation in this first year. We need to show results,” he told AFP in an interview in Yangon.
“This is not enough to convince people to come back,” he said.
Grandi visited the camps in Bangladesh in April.
The two countries have signed a repatriation agreement but so far virtually no refugees have returned, fearing for their safety and unconvinced they will be granted citizenship.
Myanmar pejoratively labels the Rohingya as “Bengali,” implying they are illegal interlopers and the community has had its rights eroded over decades.
Gaining independent access to northern Rakhine is difficult with most journalists, observers and diplomats only allowed on brief chaperoned visits.
Grandi defended the UNHCR’s involvement in a plan by the Bangladeshi government to move some 100,000 refugees onto low-lying island Bhashan Char.
The area in the Bay of Bengal is prone to flooding and cyclones.
Rights groups oppose the scheme that has also so far been universally rejected by the Rohingya themselves.
The refugee agency must be “involved” to have the necessary information in order to take a stance on the issue, Grandi said.
“We’re still at that stage, no more than that.”
He also visited camps near Rakhine’s capital Sittwe, where nearly 130,000 Rohingya have been confined since a previous bout of violence in 2012.
Myanmar has announced it will close the camps but many are skeptical the displaced will enjoy more freedoms.
Grandi said the UNHCR would reconsider its role in providing services if conditions did not substantially improve.
“To simply transform the camps, upgrade the camps, upgrade the houses, for example, but leave them in the same situation will not be a solution,” he said.