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IMO 2020 will upset refinery margins-III: Why are refiners not investing fast enough?
Aug 16:
The coming into effect of the IMO 2020 regulations should ideally mean that refiners must begin costly refining modifications like adding new coking capacities
8But why are they not doing so at a fast enough pace?
8This may well be because the price volatility that will be created from the IMO rule implementation is not expected to last long enough to make such investments viable.
8Markets are expected to rebalance in a couple of years, and this discourages significant capital investments in complex refining units, which have payback periods of at least two decades.
8Also, there seems to be enough room to process more crudes to meet the expected increases in demand for distillates for marine fuel use, but this does not address the problem of the residual oil glut arising from the introduction of the IMO regulation. Click on Report for more.
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8But why are they not doing so at a fast enough pace?
8This may well be because the price volatility that will be created from the IMO rule implementation is not expected to last long enough to make such investments viable.
8Markets are expected to rebalance in a couple of years, and this discourages significant capital investments in complex refining units, which have payback periods of at least two decades.
8Also, there seems to be enough room to process more crudes to meet the expected increases in demand for distillates for marine fuel use, but this does not address the problem of the residual oil glut arising from the introduction of the IMO regulation. Click on Report for more.
