The Impact of IMO 2020 IMO 2020 Very

The Impact of IMO 2020

IMO 2020 • Very Low Sulphur Fuel Oil (VLSFO 0. 5% max. sulphur) required outside the Emissions Control Area (ECA) unless a vessel is equipped with an approved Exhaust Gas Cleaning System (Scrubber).

Market In Transition Current Bunker demand for all fuel grades VLSFO rapidly replacing High Sulphur IF 380 Fuel Oil (3. 5% max sulphur) IF 380 Fuel Oil (0. 5% max sulphur) Low Sulphur Marine Gas Oil (0. 1% max sulphur) IF 380 3. 5% availability will decline in 2020.

VLSFO Quality • In Vancouver VLSFO will be a LSMGO/ IFO blend. • Blend to meet for sulphur specification (low viscosity) • Stability of blend • Fuel Compatibility (mixing fuels onboard)

VLSFO Supply • • Fuel oil/ diesel blends Low viscosity Premium to 3. 5% fuel oil Discount to LSMGO

IFO Supply • IFO supply will continue to be available in Vancouver for vessels equipped with approved Scrubbers. • Limited refinery/ terminal IFO tanks and limited barge capacity will be on-going supply constraints. • Price will be dependent on ratable volumes/ throughput. • Price discount or premium?

LSMGO Supply • Vancouver supply outlook is positive • Shortage of high flash diesel in some markets • Vancouver diesel prices trade at a premium to most markets

Operational Constraints • Tank segregation on barges – Limited high sulphur capacity – Demand seasonal in Vancouver • Refinery optimization-ratable demand – Alternative markets – Change in crude slate-lower sulphur

2020 Prices • VLSFO prices dependent upon IFO/ Diesel blend ratios. • LSMGO prices will rely on supply/ demand scenario (current forecast is continued long supply in Vancouver). • HFO priced on sulphur content (lower sulphur HFO will price at a premium-there is value in sulphur).

Price Risk • • Geopolitical risk factors Sanctions Tariffs Aging Refinery Infrastructre

The Future of Bunkers • LNG Bunkers • Battery Power • Methanol

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