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Tankers: Uncertainties remain in EU over sulfur emissions rules: sources

London (Platts)--12 Oct 2015 531 am EDT/931 GMT


There are still some ambiguities on the enforcement of sulfur-dioxide emission control in Europe amid legal uncertainty as to who is responsible for the inspections, shipping sources said Friday.

Since January 1, ships operating within 200 nautical miles offshore of North America and the Northwest European Emission Control Area must use fuel with maximum sulfur content of 0.1%, or find an alternative means of compliance.

"It is unclear as to whether a port state can issue a fine for non-compliance committed outside its territorial waters," said Niels Bjorn Mortensen, director of regulatory affairs at Danish shipping group AP Moller-Maersk.

"The only entity which can sanction a ship for non-compliance on the deep sea [outside any economic zone] is the ship's flag state, and not all flag states may have a big interest in penalizing their own customers," he added.

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"With the level of penalty established, it could be a good business to be non-compliant," Mortensen said. "In one of the Baltic countries, for example, the fine you'll get for non-compliance is stated to be Eur1,500 ($1,704). A large ship can save 15,000 Euros per day, and spend 10 days in the SECA sailing in and out again."

DIVERSE FINES

According to a Denmark based maritime analyst, SeaIntel Consulting, for some North European countries, there is still a mismatch between potential gains for carriers who would consider evading low-sulfur requirements and the potential repercussions.

Denmark's penalty will be tested in a court case which is unfolding currently. Originally, it was said to be equal to the cost advantage the carrier had on that voyage, according to SeaIntel, but the penalties may change after the case is heard.

"While in countries like Sweden and Finland, the fine will be established when the first case goes to court, Germany will charge Eur2,000-Eur5,000. In Netherlands a ship will be charged up to Eur800,000, and in the UK it will be up to GBP50,000 ($76,700)," according to a report by SeaIntel.

"In Lithuania, the penalty will be up to Eur1,500, plus the price of taking proper fuel, in Belgium it would be up to Eur6 million to the shipowner, around Eur175,000 to the shipmaster, and Eur75,000 to any officer on board participating," according to the analyst. Lastly, Latvia is expected to charge Eur350-1,400.

"The authorities carry out two kinds of inspections for use of the correct fuel. Firstly, the authorities check the vessel's fuel log and other relevant documents. This is the most frequent kind of inspection since it is less time-consuming and hence cheaper to do," according to SeaIntel.

"The other kind of inspection involves actually sampling the bunker fuel; often samples are taken from the engine to test what kind of fuel has been pumped through it recently. This test is more precise, but also more costly and time-consuming, so it is normally only done if there are grounds for suspicion," the analyst said.

Carriers, with no concern for compliance, seeking to reduce bunker costs of vessels bound for Lithuania or Russia could choose to use fuel with a higher concentration of sulfur than allowed for the first part of the voyage into the ECA zone, and then just switch to low-sulfur fuel when they enter the Baltic Sea, according to SeaIntel.

"This would of course mean that they would have to forge the fuel documents; however, such a vessel would probably pass the fuel inspections, as the fuel being pumped through the engine last would be low-sulfur and therefore meet the requirements," the analyst said.

--Shubhlakshmi Shukla, shubhlakshmi.shukla@platts.com
--Edited by Jonathan Loades-Carter, jonathan.carter@platts.com

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