Russia will be the country that will see the biggest losses since the introduction of new rules for cleaner fuels in maritime transport, which should enter into force in 2020. And the reason for this is that Russian industry is not ready for this change, Finance & Markets reported.
The refiners in different parts of the world have already been able to introduce changes in their production to meet the new pollution constraints caused by IMO’s MARPOL Annex VI. And while those in Europe and the United States look well positioned, Russian companies still do not meet all the requirements.
«The Russian oil industry is likely to be the biggest loser in this situation», says IHS Markit senior analyst, Aleksandr Scherbakov. «There is no chance for them to be 100% ready when the new rules come into force and this will force Russian companies to sell their products at much lower prices», added he.
According to the estimates of the investment bank Wood & Co Financial Services the loss could reach $3.5 billion in 2020. This is more than a third of Russian supplier revenues, which for the past year amounted to $ 9 billion.
The new regulations adopted by the International Maritime Organization (IMO) mean that ships will have to use low-sulfur fuels or install sewage facilities. The sulfur content should be at the level of 0.5% at the current level of 3.5%. Russia is not producing fuels by the end of September to meet this requirement. More than two-thirds of the fuel there contains at least 2.5% sulfur or more.
MARPOL, the International Convention for the Prevention of Pollution from Ships, is concerned with preventing marine pollution from ships. Specifically, Annex VI of MARPOL addresses air pollution from ocean-going ships.
The international air pollution requirements of Annex VI establish limits on nitrogen oxides emissions and require the use of fuel with lower sulfur content, protecting people’s health and the environment by reducing ozone-producing pollution, which can cause smog and aggravate asthma.