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Saturday, 15 December 18
COMING CHANGES IN MARINE FUEL SULFUR LIMITS WILL AFFECT GLOBAL OIL MARKETS - EIA
 International regulations limiting sulfur in fuels for ocean-going vessels, set to take effect in January 2020, have implications for vessel operators, refiners, and global oil markets. Stakeholders will respond to these regulations in different ways, increasing uncertainty for crude oil and petroleum product price formation in both the short and long term.
When burned, the sulfur in marine fuel produces sulfur dioxide, a precursor to acid rain. The sulfur content of transportation fuels has been declining for many years because of increasingly stringent regulations implemented by individual countries or groups of countries. In the United States, federal and state regulations limit the amount of sulfur present in motor gasoline, diesel fuel, and heating oil.
The upcoming 2020 rules apply across multiple countries’ jurisdictions to fuels used in the open ocean, representing the largest portion of the approximately 3.9 million barrel per day global marine fuel market, according to the International Energy Agency.
The International Maritime Organization (IMO), the 171-member state United Nations agency that sets standards for shipping, is set to reduce the maximum amount of sulfur content (by percent weight) in marine fuels used on the open seas from 3.5% to 0.5% by 2020. These regulations are intended to reduce sulfur dioxide, nitrogen oxides, and other pollutants from global ship exhaust.
The 2020 reduction in sulfur limits follows a series of similar reductions in marine fuel sulfur limits, such as those that reduced sulfur content of marine fuels in IMO-designated Emission Control Areas from 1.0% to 0.1% in 2015. Other areas around ports in Europe and parts of China have adopted similar sulfur restrictions.
Vessel operators have several choices for compliance with the new IMO sulfur limits. One option is to switch to a lower-sulfur fuel compliant with the new IMO rules. However, the cost, widespread availability, and specifications of a new fuel for use in marine engines is still uncertain.
Another option is to use scrubbers to remove pollutants from ships’ exhaust, allowing them to continue to use higher-sulfur fuels. However, the process of installing scrubbers can be costly and can increase a ship’s operating costs. A small portion of existing marine vessels has already installed scrubbers, and that portion is not expected to increase greatly before 2020 because of time constraints and limited installation capacity. Even if scrubbers become widely adopted, which would allow the continued use of fuels with higher-sulfur content, the price and availability of higher-sulfur fuels after 2020 remains uncertain.
Ships also have the option to switch to nonpetroleum-based fuels. Some newer ships and some currently being built have dual-fuel engines that would allow them to use nonpetroleum-based fuels such as liquefied natural gas (LNG) after minimal modifications. However, the infrastructure to support use of LNG as a shipping fuel is currently limited in both scale and availability.
The upcoming IMO regulations pose a significant challenge for global petroleum refineries: how to increase the supply of low sulfur products for use in marine applications and minimize the output of high sulfur oils.
Residual oil—the long-chain hydrocarbons remaining after lighter and shorter hydrocarbons such as gasoline and diesel have been separated from crude oil—currently makes up the largest component of marine fuels used by large ocean-going vessels, also known as bunker fuel. Removing sulfur from residual oils or upgrading them to more valuable lighter products such as diesel and gasoline can be an expensive and capital-intensive process.
The choice of compliance path for vessels also introduces a risk to refiners: if scrubbers become widely adopted, higher-sulfur residual oils might still be used, potentially reducing the value of existing and new refining units capable of upgrading the residual oils.
One approach refineries could pursue is to divert more low sulfur distillate fuel into the bunker fuel market, which would mean ocean-going ships would be competing with trucks, heavy equipment, trains, and planes for supplies of distillate fuels at a time when global demand for distillate is already high. To respond to added demand for distillate fuels, refineries can increase the rate they process crude oil or invest and build more refinery capacity to produce distillate fuels. Both options would increase demand for crude oil.
Refineries might also choose to process crude oils that are lower in sulfur, yield a greater amount of distillates, and yield lower amounts of residual oils. Changes in the types of crude oil refineries purchase would then change how different crude oils are priced relative to each other and crude prices overall.
The decisions refiners and shippers make in response to the IMO 2020 rules heavily influence one another, adding to uncertainty and complexity. In January 2019, EIA will release the first Short-Term Energy Outlook that includes monthly projections through December 2020. This report will discuss short-term implications and uncertainties surrounding the IMO regulations. Later that month, the Annual Energy Outlook 2019 will describe potential long-term implications of the regulations.
Principal contributor: Mason Hamilton
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Wednesday, 06 March 19
KOREA SOUTHERN POWER CO INVITES BIDS FOR 980,000 MT OF 4600 NCV COAL FOR THREE YEARS
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,600 kcal/kg NCV low calo ...
Wednesday, 06 March 19
SHIPPING MARKET INSIGHT - INERMODAL
In a downward moving market, softer SnP activity is usually a given, as the gap between Sellers’ and Buyers’ ideas widens, especially w ...
Saturday, 02 March 19
A 60,500-TONNER WAS BOOKED DELIVERY SINGAPORE, VIA INDONESIA, REDELIVERY WEST COAST INDIA, AT $11,250 - BALTIC BRIEFING
Capesize
Vale’s ongoing absence from the Brazil spot market continued to have a negative impact on sentiment, with rates falling in all a ...
Thursday, 28 February 19
COAL'S PERFECT STORM HITS $70 BILLION AUSTRALIAN PROJECTS - BLOOMBERG
It’s been a tough few weeks for our coal industry.
First there was a court ruling blocking a new mine on climate change ground ...
Wednesday, 27 February 19
SHIPPING MARKET INSIGHT - INTERMODAL
With the IMO 2020 approaching, it becomes challenging for the market to accurately explore the run-up to the deadline given that marine fuel-oil of ...
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- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Orica Australia Pty. Ltd.
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Power Finance Corporation Ltd., India
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sindya Power Generating Company Private Ltd
- Karbindo Abesyapradhi - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Indika Energy - Indonesia
- Coal and Oil Company - UAE
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- GAC Shipping (India) Pvt Ltd
- Romanian Commodities Exchange
- Planning Commission, India
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Standard Chartered Bank - UAE
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- New Zealand Coal & Carbon
- Australian Coal Association
- Grasim Industreis Ltd - India
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Parliament of New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Edison Trading Spa - Italy
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- Global Green Power PLC Corporation, Philippines
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Riau Bara Harum - Indonesia
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Deloitte Consulting - India
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
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