North America currently has a lower share of the global bunker market than its share of global trade. This is a reflection of the current global bunker fuel market being dominated by HSFO, which is more costly in the United States than in Europe, as the USGC has more sophisticated deep conversion refining capacity that can process heavy residue feedstocks. However, North America has a high global share of the global gasoil bunker market, due to its being an Emissions Control Area and a low cost source of middle distillates. The IMG IVIarine Environmental Protection Committee decided in October 2018 to implement a requirement that the flue gas emissions of the global shipping sector will be limited to burning the equivalent of 0.5wt% S fuels from 1 January 2020. There are a number of compliance options available to ship owners to meet the mandatory requirement, but broadly, the market impact of the regulation will be determined by: 1.The availability of fuel oil with a sulphur level less than 0.5wt% (termed ULSFO) and its associated price 2.The penetration of on-board scrubbers, which treat the exhaust gas, enabling HSFO to . continue to be used 3.Legislative compliance, as this determines the amount of gasoil required by the sector. Given the above, the market outlook is uncertain,but there will be a shift away from HSFO to gasoil by the shipping sector, which has implications on the global refining system as: 4.Fuel oil demand falls, resulting in lower prices, as it needs to be converted to more valuable fuels by existing spare residue upgrading capacity 5.Rising gasoil demand could lead to a price change that, in a competitive market, supports its increased production The market environment should benefit North America, due to the configuration of many of its USGC refiners. Also, North America has the opportunity to take a much bigger role in the future global bunker market, given its capabilities to be a major supplier of ULSFO components and gas oil. This opportunity requires investment in the logistics necessary to become a major global bunkering location..
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