World News
Declining Refinery Margins Could Shrink Capacity, Research Finds
Regulation aimed at containing climate change and the concomitant reduction in demand for oil could see the refining sector lose signicant capacity, according to new research.
The study, The Margin Call: Refining Capacity in a 2 degree Celsius World, was undertaken by consultants Carbon Tracker and predicated on the rise in global temperature being held at 2 degrees celsius.
On that assumption, oil demand would peak in 2020 and decline by up to 23% by 2035 thereby making a big dent in refinery earnings.
Transport fuel is identified as one of the most profitable refining outputs but also one most at risk.
"Diesel, gasoline and jet fuel products offer the highest margins across the product mix from refineries, and they also constitute around 70% of global product yield," according to the report.
While the marine market is not specifically mentioned in the report, the change to the global sulfur cap on bunker fuel in 2020 would see shipping competing with land transport for distillate fuels at a time when the refining sector has been unclear on how it will respond to the coming change in the pattern of bunker demand.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 655.50 | 2.00 | 808.50 | 4.50 |
| Rotterdam | 619.00 | 0.00 | 789.00 | 8.00 |
| Houston | 628.50 | 7.50 | 812.50 | 1.50 |
| Fujairah | 653.50 | 4.50 | 900.00 | 2.50 |
| Global 20 Ports Average | 672.00 | 0.50 | 885.00 | 7.00 |
| Global 4 Ports Average | 639.00 | 2.50 | 827.50 | 2.00 |
| Global Average Bunker Price | 727.50 | 1.50 | 933.50 | 5.00 |
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