It is rare that a fuel specification change could disrupt the oil value chain, but the International Maritime Organisation’s (IMO) planned change to bunker fuel regulation may do just that.

The IMO, the United Nations’ body responsible for the safety and environmental performance of the shipping sector, has ruled that from 1 January 2020, marine sector emissions in international waters be slashed.

To comply, the marine sector will have to reduce the sulphur emissions by over 80%, which can be achieved by switching to lower sulphur fuels. The current maximum fuel oil sulphur limit of 3.5 weight per cent (wt%) is to be reduced to 0.5 wt%. The new tougher limits will be the largest reduction in the sulphur content of a transportation fuel undertaken at one time.

Scale of the Issue

The marine sector, which consumed 3.8 million barrels per day (b/d) of fuel oil in 2017, is responsible for half of global fuel oil demand. Most of this fuel oil has a sulphur content of between 1 and 3.5wt%, making it a high-sulphur fuel. The marine sector also consumes just over 1 million b/d of marine gas oil, which is a lower-sulphur, higher-value distillate. However, this represents just 5% of the global demand for diesel and gas oil demand, the majority of which is consumed in the heavy-duty trucking sector.

If the marine sector fully complied with the IMO regulation by simply switching from high-sulphur fuel oil (HSFO) to marine gas oil, the impact on the refining sector would be dramatic.

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