Shipping/Oil: The Coming Low Sulfur Rules Will Result In European Refineries Shutting Down

Via gCaptain:

Multiple oil refineries in Europe will be too unprofitable to continue trading once the industry has dealt with sweeping new rules governing shipping fuel that start next year, according to an executive at a U.K. plant.

Refineries globally are bracing for one of the biggest mandated changes in the the industry’s history — rules forcing the vast majority of ships to use fuel containing less sulfur. The regulations, widely known as IMO 2020, start in January and have been touted as positive for companies that turn crude into more valuable products. But smaller, simpler plants in Europe often churn out excess gasoline, as well as the type of fuel that will soon become outlawed for most vessels.

“Post the shift, I believe some of these old weak refineries will have to shut down,” Srinivasalu Thangapandian, the chief executive officer of Stanlow-oil refinery owner Essar Oil U.K., said in an interview in Singapore. “Fuel oil is going to be negative and gasoline, you see margins of almost zero sometimes. Europe is heavily oversupplied in gasoline.”

The refineries hardest hit would be those designed to devote almost half their production to gasoline, and as much as 14% to high sulfur fuel oil, he said, adding that Stanlow won’t suffer the same pressures because it churns out smaller proportions of those fuels....MORE