ILMA Compoundings – March 2019 - 14

INDUSTRY RUNDOWN

Market Report
IMO 2020: Group I supply readiness
By Jeff Biamonte
With the Jan. 1, 2020, enforcement date of the
International Maritime Organization's (IMO) global
0.5 percent cap on sulfur fuel fast approaching, vessel
owners and operators are working to understand the full
implications on their fleets and the potential compliance
options best suited for their business.
The right solution will be dependent on each fleet and
individual vessel, as there is no "one-size-fits-all" approach for
complying with the upcoming regulation. IMO 2020 will
ultimately propel the marine industry into a multi-fuel future
with a range of options. Some in the industry are considering
the continued use of high-sulfur fuel in conjunction with an
exhaust gas cleaning system, also known as scrubbers, or the
use of liquefied natural gas (LNG). However, these solutions
might not be suitable for all vessels.
Another option is the use of compliant low-sulfur (0.5
percent sulfur content or below) fuel options that meet IMO

2020 standards. Low-sulfur fuels, including distillate, residual
and blended alternatives, will likely be initially favored by the
majority of the industry.
Adoption of compliant low-sulfur fuel options will have
a ripple effect on lubricant formulations. Vessel owners
and operators will need lubricants specifically designed
to work with their fuel choice, engine technology and
operating conditions.
Group I base stocks - particularly Group I heavy neutrals,
as well as bright stock - are highly valued and well-suited
for marine applications that value high viscosity and solvency,
and they will continue to be highly relevant in the foreseeable
future. However, IMO 2020 may pose a challenge for some
refineries because of the potential reduced demand for their
high-sulfur fuel production and an increased demand for
compliant fuels.
Individual refiners can meet the challenge by investing in
resid destruction or desulfurization facilities, or by changing
to lower-sulfur and lighter-crude feedstocks. However, these
options may come at a significant capital investment. For
some Group I base stocks producers, the cost of investment
and/or the higher feedstock cost might prove to be a challenge
to their continued operation. As a result, some producers may
rationalize Group I operations post-IMO 2020, accelerating
existing concerns around future availability.
With Jan. 1, 2020, approaching, base oil producers and
suppliers will need to understand these potential challenges
and position themselves to make their base stocks production
resilient to the regulation. Changes abound in the marine
industry in light of IMO 2020, and it's important now more
than ever for individual finished lubricant manufacturers
to work with their base stocks producer to determine the
compliance option best suited for their operations.
Biamonte is global product development manager at
ExxonMobil.

14

MARCH 2019

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