EghtesadOnline: The National Iranian Oil Company supplies almost 55% of low-sulphur fuel to Iran's shipping fleet that complies with the International Maritime Organization’s new regulations demanding a 0.5% global sulphur cap for marine fuels, deputy for fleet development department in the Islamic Republic of Iran Shipping Lines said.
“IRISL requires at least 35,000 tons of low-sulphur fuel a month,” Abdolreza Mohebbi was quoted as saying by IRNA.
Domestic refiners including Shazand Refinery in the central city of Arak, Markazi Province, supply IRISL 20,000 tons of the fuel per month since January and the balance is imported, he noted.
Around 180 million tons of this fuel is used a year across continents by vessels and ships, of which less than half a million is consumed in Iran, he added.
IMO’s low sulphur regulation came into effect from Jan 1, 2020. All sea-going vessels worldwide have to comply and reduce their sulphur emissions by 85%.
Under the new guidelines, ships are obliged to use marine fuel with sulphur content of no more than 0.5% against the current limit of 3.5% to reduce sulphur oxide pollution, particularly for populations living near coastal regions.
Shazand Refinery in Arak, Markazi Province, is one of companies that produces the low-sulphur product. However, “transferring the fuel from Arak to the southern ports, namely Hormozgan Province's Shahid Rajaee Port (1,300 km away) imposes extra cost on IRISL,” he said, stressing that such costs can be avoided if the fuel is produced in refineries in the south.
According to Yahya Ziaee, secretary general of Iranian Shipowners’ Association, 70% of basic goods such as rice, corn and oil seeds are imported by sea and the government’s (wrong) policies (not producing the fuel in southern refineries) are piling pressure on shippers, which will definitely push up inflation.
“Forcing shipping companies to buy fuel from foreign firms has raised the cost of imports and end users have to foot the bill,” Ziaee said.
Moreover, foreign vessels too will avoid Iranian ports simply because they will not be able to buy the IMO-mandated low sulphur fuel.
Regarding rumors on social media about NIOC’s decision to offer low-sulphur fuel on Iran Energy Exchange (IRENEX), he said so long as demand outweighs supply doing so would be a wrong decision.
IRISL owns 46 vessels and four chartered ships, with 96,383 TEU (20-foot equivalent unit) and 58,032 TEU capacity, respectively. Its share of the global shipping market is a meager 0.7%.
The company’s global ranking, based on freight handling capacity, improved from 23rd in fiscal 2015-16 to 13th in 2019.