How the world's oil refiners plan to grapple with their fuel oil output after 2020
High-sulfur fuel oil (HSFO), essentially the leftovers of an oil refiner’s output, will still flow from refineries around the world even after new rules start up in 2020 curtailing its use in the global shipping fleet, a Reuters survey showed.
Sixty percent of the 33 refineries contacted by Reuters in a global survey will still produce HSFO in 2020 although the supply will tighten as 70 percent of these refiners plan to reduce their output.
Starting that year, ships will have to use marine fuel, which primarily consists of residual fuel oil, with a maximum sulfur content of 0.5 percent under International Maritime Organization (IMO) rules to reduce air pollution.
Currently, the global shipping fleet, which includes oil and chemical tankers as well as container ships, uses as much as 3.3 million barrels per day of HSFO with a maximum of 3.5 percent sulfur.
Refiners will have little incentive to produce HSFO after the regulations though some demand will remain as a small but growing number of vessels are fitted with smokestack scrubbers that remove the sulfur from the exhaust fumes and power plants will continue to consume the fuel.
“Although HSFO demand for ships is expected to decline substantially in 2020, the oil’s demand for power generation and general users will remain,” Japan’s second-largest refiner Idemitsu Kosan (5019.T) told Reuters in the survey.Previously:
“In future, demand for scrubber-equipped ships is projected to recover, so we expect HSFO output to continue.”
UPGRADES
When asked how they plan to reduce HSFO output, just over half of the refiners said they will upgrade their plants to further process their fuel oil to produce more higher value products such as gasoline and diesel...MORE
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