Moving into 2018
Discussing IMO’s 2020 legislation
BY 2020, THE INTERNATIONAL MARITIME ORGANISATION (IMO) REGULATION REQUIRES SHIPPERS TO EITHER CLEAN UP
EMISSIONS OR USE BUNKER FUEL CONTAINING NO MORE THAN 0.5 WT% SULPHUR RATHER THAN THE HIGH CURRENT
PERMISSIBLE LEVEL OF 3.5 WT%
Earlier this year, a KBC Advanced Technologies
survey of oil refiners across Europe and the Middle
East revealed that over 40% needed to revisit
their strategy in respect of this low sulphur bunker
fuel regulation. The Surrey-based company
‘believes the burden of compliance will fall on
the refiners as most shippers are unlikely to be
able to afford the required emissions abatement
investments’.
“For the refiner, the traditional market for high
sulphur residues has been marine fuel. This will
largely disappear on 1st January 2020,” says Andy
Roberts, global practice executive, production
optimisation for KBC.
“The consequent collapse in high sulphur fuel
oil prices and refinery margins requires refineries
to react now or risk going out of business. Shippers
(and the bunker providers who provision the fuel
at terminals) are relying upon the refining industry
to supply the required low sulphur marine fuel and
components to the market.
“The IMO’s decision, while being good for
the environment and our health, is pushing the
refining industry to make difficult decisions within
a very short timeframe.”
For an in-depth report – The IMO’s 2020
marine fuel sulphur cap and challenges for the
global refining industry – www.kbcat.com/info/
imo2020/
On the agenda in Athens
At last month’s ERTC conference* in Athens, Joris
Mertens, senior staff consultant at KBC, not only
discussed the impact of 0.5% sulphur on the
bunker fuel world but also looked to ‘inspire and
encourage more companies to proactively look at
their businesses and the steps they will need to
take to meet the sulphur fuel legislations’.
Apart from the challenges, Joris pointed
out that the IMO 2020 regulation will carry
various opportunities for some refineries, ‘with
businesses able to produce on-purpose motor
fuels (components low in sulphur) not having to
worry about the price hike in the market due to
high demand’.
Moderating the keynote leaders panel at
ERTC was Alan Gelder, vice president of refining,
chemicals and oil markets at Wood Mackenzie,
who provided an overview as to how refiners
should approach the challenging new market
environment and improve their long-term viability.
“Although shippers have various options,
there will, no doubt, be implications for the
refining sector which must work within the
tight timeframe the IMO has set for the
implementation of the new fuel standards,” said
Alan.
“The downstream sector has undergone
significant changes in recent years. And, as
European demand for refined products is expected
to fall, refiners in the region need to ensure they
can access profitable export markets.”
“FOR THE BUNKER
PROVIDERS – THE
MIDDLEMEN BETWEEN
THE REFINERIES AND THE
SHIPPERS – THE IMO 2020
REGULATION PRESENTS
ITS OWN CHALLENGES”
The impact on bunker providers
“For the bunker providers – the middlemen
between the refineries and the shippers – the IMO
2020 regulation presents its own challenges,” says
KBC’s Andy Roberts
“They are soon to face an array of blendstock
quality and compatibility issues to deliver
compliant, safe and stable fuels.
“Their world is about to become very complex
and costly. As they look to address the challenge
of managing sulphur components, margin,
competition and port readiness, consolidation is
taking place to reduce overheads. Some, however,
are looking to make the most o f the opportunities.
“Is it financially viable to exit the high sulphur
fuel oil market? Or is this an opportunity for the
refinery that encourages long term strategic
investment for the next 20 years?” added Andy.
*Hosted by Hellenic Petroleum, this year’s
ERTC conference saw 597 professionals
gather to discuss a range of topics including
security of supply, biofuels, gasoline v diesel,
collaboration between refining and the
automotive sector, attracting and nurturing
new talent and of course the IMO regulations.
Next year’s event will be at the Grand Hyatt
in Cannes
(From top) KBC’s Andy Roberts and Joris
Mertens and Alan Gelder of Wood Mackenzie
Fuel Oil News | December 2017 17