A new survey conducted by consulting company KBC found that the majority of refiners don’t have a back-up plan to cope with the Sulphur requirements effective from 2020, as only 15 per cent of oil refiners know how they are going to handle it. With an estimated industry cost of $2 billion to meet the 2020 sulphur limit rule, the findings suggest that there is still uncertainty around how to respond.
By 2020, IMO has mandated that shipping lines either clean up emissions or use bunker fuel that has no more than 0.5 per cent m/m sulphur rather than the current permissible level of 3.5 per cent m/m. Ahead of this decision, KBC, consulting company for the energy and chemical industry, surveyed refiners across the US, Europe, the Former Soviet Union and South Africa about their attitudes to the upcoming regulation.
Stephen George, Chief Economist, KBC, explains: “While the shipping industry expects the refiners to meet their supply requirements, the refining industry is still waiting to know to what extent the shipping industry will install emission ‘scrubbers’ on board. This disconnect proves that now is the time for refiners to assess what choices are available and the decisions to be made for a strategic pathway forward.”
Mr George suggests that failure of refiners to study, agree and implement a robust strategy will bring severe economical damage to many of the ‘less complex’ refineries. However, the bunker fuel transition may prove a perfect time to implement new margin-boosting technology, addressing overcapacity and oversupply in most refineries.
“Implementing such technology for the reduction of other emissions and meeting other regulatory requirements at the same time may help to future-proof refineries while boosting margins and delivering the cleaner fuels that the shipping industry will continue to require. New refinery optimization strategies based on rigorous simulations, analytics and real-time data integration will assure continued compliance without sacrificing margin capture and subsequently protecting the price at the pump for consumers”, concludes Mr George.
An in-depth relevant report by KBC may be found herebelow:
