The oil and transport industry is preparing for a dramatic shift in MARPOL global marine fuel sulphur limits, which are to be reduced from 3.50% to 0.50% coming into effect 1st January 2020.
The global debate continues as to whether there will be sufficient compatible low sulphur, distillate fuels available to meet this potential future marine fuel demand.
Furthermore, refinery owners are questioning whether to invest in the necessary upgrading equipment, especially as the financial returns for these billion-dollar investments are uncertain and the overall environmental impact (including increased CO2 emissions according to Concawe) may be worse from cradle to grave when compared with the status quo of using high sulphur fuel oil plus exhaust gas cleaning systems (EGCS) on vessels.
The resulting price spread between HFO and Gas Oil (GO) widens significantly from 2019, as a result of IMO's 0.5%S emissions regulations coming into effect in 2020. This is hugely positive for the MSAR® fuel solution because the downgrade of distillates to the conventional fuel oil pool is amplified resulting in cheaper residue for blending to MSAR® and hence a higher refinery profit margin to split between the refiner, end-user and Quadrise to repay any investments in under 12 months.
MSAR® conversion, therefore, provides for "affordable compliance", as fuel savings can be used to subsidise the upgrading of existing assets including new EGCS where required to improve environmental performance.