Major Challenges Confront Iran Shipping Fleet

EghtesadOnline: Iran's shipping fleet cannot get services (like bunkering) in international waters and ports from Jan 1 because the vessels have not been able to conform with the International Maritime Organization’s (IMO) new regulations for a 0.5% global sulphur cap for marine fuels, the secretary-general of Iranian Shipowners' Association said Sunday.

News ID: ۷۴۹۳۲۲

30 December 2019

“With less than two days to go before implementation of the global low sulfur regime for bunker fuels, our shipping fleet has not started using very low sulfur fuel oil (VLSFO) because (low sulfur) inventories are low,” Yahya Ziaee was quoted as saying by IRNA.

Several rounds of talks have been held with the Oil Ministry, Ports and Maritime Organization and the Majlis Energy Commission since 2005. Nonetheless, indifference of officials has deprived the fleet from enough standard fuel two days before the new law comes into effect, he complained.

According to the official, Shazand Refinery in the central city of Arak, Markazi Province is the only refinery obliged to produce 500,000 tons of VLSFO a year and this is while Iran's shipping fleet requires at least 1.5 million tons of the fuel, Financial Tribune reported.

Referring to alternatives to achieve a compliant fuel oil [now that the IMO deadline cannot be met], he said that one solution is to buy the fuel from other countries (like Singapore). But this will not be economically viable not only due to the exorbitant prices ($750 per ton) but also because of problems in financial transactions created by the new US economic sanctions.

Highlighting other problems, Ziaee noted that it is customary that vessels are loaded with the help of bunkering companies at the ports, but the National Iranian Oil Products Distribution Company has said the shipping companies should refer to Shazand Refinery to buy their fuel, which is a big challenge for the shippers.

NIOPDC has announced that all its tanker fleet is busy carrying fuel to power plants as the National Iranian Gas Company has reduced their share of natural gas during the winter season.

Higher Import Costs

Ziaee added that 70% of basic goods such as rice, corn and oily seeds are imported via ships and seaports and the government’s wrong policies in mounting pressure on shipping firms would definitely raise inflation rates.

“If shipping companies are forced to buy fuel from abroad, carrying goods to the country will apparently cost more and end users will face more financial pressure.”

Moreover, foreign ships too will avoid Iranian ports simply because they will not be able to access VLSFO.

Crude oil contains sulfur which, following combustion in the engine, ends up in ship emissions. Sulfur oxide (SOx) is known to be harmful to human health, causing respiratory symptoms and lung disease.

In the atmosphere, SOx can lead to acid rain, which can harm crops, forests and aquatics and contribute to acidification of the oceans.

Limiting SOx emissions from ships helps improve air quality and protects the environment.