London — Complying with the International Maritime Organization's tighter sulfur cap from 2020 will not be straightforward for refineries to enable, Damien Valdenaire, science executive at oil industry research body Concawe, said Thursday.
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With refineries needing to maximize production of compliant 0.5% fuel oil in a tight turnaround, one of the greatest difficulties they face is that their conversion units will be pushed to maximum throughput, which will in turn push up CO2 output up by as much as 4%, Valdenaire said at Petrospot's ARACON conference in Rotterdam, citing the findings of the body's LP model simulations.
Another concern for suppliers is the potential shift in trade flows, he said. Europe will need imports of middle distillate fuels to remain stable in order to have enough volume to blend product in order to produce compliant fuel, Valdenaire said.
Of all the demand for compliant fuel in 2020, 50-70% of this is expected to be for middle distillate-based compliant fuels, Valdenaire said.
Continued trade flows of high sulfur fuel oil will also be a key consideration for refineries as some volume will still be produced and refineries will need to be able to export it should the expected demand from those vessels with scrubbers remain relatively low.
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While low sulfur crude oil will also help refineries produce compliant fuel -- taking some of the pressure off conversion units -- the average European crude slate is not expected to change by 2020, so this is unlikely to be a solution that refineries can greatly rely upon.
What Concawe's LP model cannot simulate is compatibility of fuels and as a result it begun an investigation along with ISO and CIMAC to test anonymous samples of compliant fuel oil from European refineries for compatibility. The results are expected to be released in six months' time.
Concluding his presentation at ARACON, Valdenaire said it is important that the industry as a whole supports "consistent and effective implementation of the sulfur cap" in order to ensure a level playing field for all.
In a presentation later Thursday at the conference, Charles Daly, chairman of Channoil Consulting, said he was concerned about future refining capacity in Europe.
Daly said if the cost of HSFO falls to the levels of coal -- as simulations shown in Valdenaire's presentation suggested -- many European refineries could close, meaning Europe becomes more dependent on Middle East refineries to meet marine fuel demand.
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