Home / VIDEOS / Video: Mirko Rubeis of The Boston Consulting Group on the impact of IMO sulphur cap on marine fuels on the refining industry


Video: Mirko Rubeis of The Boston Consulting Group on the impact of IMO sulphur cap on marine fuels on the refining industry

by Martin Menachery on Aug 31, 2017


Mirko Rubeis, partner & managing director, The Boston Consulting Group, Dubai.
Mirko Rubeis, partner & managing director, The Boston Consulting Group, Dubai.

International Maritime Organization (IMO) has reduced the sulphur cap on marine fuels from the existing 3.5% to 0.5%, with effect from 1 January 2020.

Worldwide, the refining industry has taken a wait-and-watch approach to this IMO regulation. Few refiners are already ready to adhere to this regulation. The IMO regulation forces a major investment on refiners as well as the shipping industry.

Against the backdrop of the IMO regulation, refiners need to find an efficient way to produce compliant fuels through blending. Using distillates is typically the most expensive way to produce compliant fuel. A cheaper option could be to use intermediate residue streams, such as hydrotreated vacuum gas oil (VGO), to realise higher prices at a lower cost. So, refineries will need to have the flexibility to optimise the operations to allow for the most efficient blending options.

Distillates are too expensive and exclusive use of distillates as a fuel is not sustainable for the shipping industry. So, exclusive use of distillates is not the solution to the IMO regulation.

Use of scrubbers will be part of the mix of the solution to the IMO regulation. At the same time, installing scrubbers could be expensive for the shipping companies. It depends on how much the HSFO price will drop, once the IMO regulation is in place. At a certain price level of HSFO, installing scrubbers could prove to be economical. So, scrubbers could become a part of the mix of the solutions.

Liquefied natural gas (LNG) is another option; but, LNG is good mainly for vessels which move from point to point, for example ferries. If you are moving around the world in an LNG-fuelled ship, you need to be certain that LNG terminals are there in appropriate places for refuelling the vessel.

Another important out-of-the-box initiative from the IMO regulation would be the partnership between refining and shipping industries. The refining industry could invest in the scrubbers used in the ships to meet the IMO regulation, whereby the refineries would circumvent investing in desulphurisation capacity or refinery upgradation.

Check out the following video to understand the options in front of refiners against the backdrop of the IMO sulphur cap as explained by Mirko Rubeis, partner & managing director, The Boston Consulting Group, Dubai.

 


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