EMEA News
IMO2020: Europe Refined Product Market to See Extra Cost Added Post-2020
The impact of the International Maritime Organisation (IMO) sulfur cap change which will boost distillate demand but weaken demand for high sulfur fuel oil (HSFO) could add significant extra cost to the European refined products market, an oil executive has said.
With marine demand much diminished, HSFO will have nowhere to go with the expected oversupply putting downward pressure on the HSFO price.
That could stimulate demand from other quarters, including shipping.
Complex refining plants are better suited to upgrading to produce low sulfur fuel oil (LSFO) whereas older plants, many of which are in Europe, are not.
The lower price of HSFO could attract the attention of power plants and teapot refineries and it could also stimulate interest in scrubbers, a technology which allows ships to continue to burn HSFO, according to senior Rosneft executive.
Cheap HSFO makes a good case for incentivising the adoption of scrubbers, Otabek Karimov was reported as saying at an International Petroleum Week forum by maritime news provider Lloyd's List.
According to Karimov, costilier distillate imports coupled to getting less for fuel oil could put a $3 billion cost onto the European refined products market in 2020.
