VGO: used to make gasoline (file image/pixabay)
Demand for vacuum gasoil (VGO), a distillate fuel grade used in blending, is likely to increase in the run up to 2020 although that demand will be tempered by the relative value of other products in the refining process, price reporting agency SP Global Platts has said.
VGO typically has 0.5% to 0.6% sulfur content for low sulfur VGO and 2% for high sulfur VGO with both grades a good fit to blend down fuel grades with a higher sulfur content.
A typical outlet for LSVGO is as a feedstock for fluid catalytic cracking (FCC) units to produce gasoline and other high-octane components while HSVGO is often run through hydrocracking units to produce diesel and gasoline.
Feedstocks are heavily dependent on FCC and hydrocracking margins, which are also reliant on gasoline and diesel crack spreads (their relative value to crude).
Citing market sources, the report said that blending opportunities for feedstocks into the 0.5% bunker pool would depend on product cracks values in 2020, at least in Europe and the US.