IMO 2020 - T minus 180

December 3, 2018 Mel Larson, Principal Consultant

The refinery industry has responded to the forthcoming IMO 2020 lower sulphur bunker fuel regulations in a variety of ways. For some it has been a new challenge and a compelling justification for investment in their plants. For others the path has been less clear ranging from considering new crude diets, to a “wait and see” approach. In any case the IMO regulation has given the industry a valid reason to improve itself, and it is buoyant with change. As the 2020 deadline approaches, changes to operating strategies are needed to make the most out of what will be a significant impact.

To meet the 1 January 2020 fuels switch, June 2019 will see the start of changing of operations. Tanks will need to be cleaned up to reduce risk of contamination, and stocks will need to be turned over to ensure a supply of compliant fuel oil is available to the market ahead of the January deadline. Refiners will want to clear out their stores of potentially low value high sulphur products before the market evaporates, creating fear and uncertainty that the market will be well supplied as the deadline approaches.

As we approach "T minus 180", KBC is having interesting discussions on how to best serve our clients individual needs. Refiners need to identify, procure and get ready to step into the unfamiliar. New operating envelopes need to be reviewed, discussed with maintenance in mind, and coordinated with the planning, scheduling and trading functions to maximize the profit potential.

Considering the current geopolitical issues, low investment in South American refining, motor fuel demand shifting away from diesel, and some 1.5 million barrels of refining capacity at risk, the future is anything but certain. The uncertainty is not going to be brief either with experts predicting that the markets are not going to find a new stability until after 2025.

Only those clients with solid preparations and the secure backing of an agile organization will get through the first months and years with optimal performance.

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Download our whitepaper ‘IMO 2020 Sulphur cap - oil refiners step up to the plate’

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