Huge Independent Refiner Prepares For Revolution In Markets
One of the world’s largest independent oil traders, Gunvor Group, plans to revamp its refinery in Rotterdam to adapt it to produce low-sulfur fuel oil that would be compliant with the new regulations on shipping fuel, Gunvor’s chief executive Torbjörn Törnqvist told Reuters.
Gunvor plans to reconfigure its 88,000 barrels per day refinery in Rotterdam, in the Netherlands, in March next year, so that it could start producing the low-sulfur fuel oil (LSFO).
“We will still produce high sulphur fuel oil but we will be able to produce both,” Tornqvist told Reuters.
According to Gunvor’s chief executive, refineries will be able to produce LSFO without compromising gasoline production and without changing the refinery’s configuration too much.
According to the new rules by the International Maritime Organization (IMO), only 0.5-percent or lower sulfur fuel oil should be used on ships beginning January 1, 2020, unless said ships have installed the so-called scrubbers—systems that remove sulfur from exhaust gas emitted by bunkers.
The International Energy Agency (IEA) estimates that demand for high-sulfur fuel oil (HSFO) will drop from 3.5 million bpd to 1.4 million bpd in just one year. By the end of 2020, an estimated 4,000 vessels—out of a global fleet of around 90,000—will have scrubbers installed which will consume some 700,000 bpd of fuel oil.
So the shipping industry is preparing for a disruption of the types of fuels it will be using as of the beginning of 2020, but the oil and fuels market, as well as refiners, are also getting ready for the impact.
Some experts and media have dubbed the new shipping fuel rules as the “single largest oil market disruptor” set to send shockwaves through the entire supply chain in the shipping industry—from crude oil producers, to refiners, to traders, to shippers, to end-consumers of everything traded on ships.
By Tsvetana Paraskova for Oilprice.com