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IMO 2020 will upset refinery margins-I: Expect big margin losses
Aug 16: The International Maritime Organization (IMO) has set a global limit for sulphur in fuel oil used to power ships at 0.5% (by mass) from the current 3.5% starting in January 2020.
8The regulations will require the removal of up to 12,000-16,000 tonnes per day of sulphur contained in the 3-4 million barrels/day of high sulphur bunker fuel used for marine transport.
8This change will propagate through the value chain; from the marine industry that will seek replacement fuels to refiners that produce bunker fuel, and to upstream oil producers who produce crudes that generate high sulphur residues used in bunkering.
8It is estimated that under different scenarios of compliance with 2020 regulations, refinery margin loss will be to the tune of $16/bbl to $20/bbl between 2020 and post-2025 relative to average 2017 margins.
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