petrospot mebc final_chris turner
TRANSCRIPT
Middle East Bunker ConferenceDubai March 16th 2016
Chris TurnerGroup Technical Manager
Cockett Marine Oil Group | www.cockettgroup.com Tel: +971 4 4255 100 (Bunkers) | Fax: +971 4 4255 111 | Email: [email protected]
Established in 1979 to provide an independent specialist marine fuel service to the shipping industry.
Today we are owned 50% by Vitol and 50% by Grindrod.
www.grindrod.co.zawww.vitol.com
Cockett Marine Oil is one of the World’s top reseller’s of bunkers and maritime lubricants, supplying approx. 8 million tons of
bunkers per annum, with a turnover In excess of US $2 billion
How will the Middle East cope with the onset of the Global Bunkering Cap ?
The Challenge Ahead for the Middle East
• Background
• Current Position
• Requirements
• Options & Alternatives
• Conclusions
Global Picture
Source : OPEC World Oil Outlook 2015 / IAE
• Marpol Annex VI Regulation 14 (SOx)
• Review requested to be initiated by 1st Sept 15
• View to report at MEPC 70, Autumn 2016
• Industry waiting with baited breath as to outcome of Fuel study
• Tug of war between Political and Technical as to implementation date – 2020 ?
• Significant investment required for Hydrocracking, Coking and Desulphurization units
• Required estimated HFO conversion of approximately 2.2-2.6 mb/d worldwide assuming low uptake in Scrubbers and 20% non Compliance
• Moving target depending on commissioning of scrubbing & non compliance
ME Current Qualities• ME Crude Oil “Sour” and Heavy with
large residual fraction
• Sulphur concentrates into heavier fractions during conventional distillation processes
• Processing of Sour Crudes correlates with qualities obtained locally Iranian
Heavy1.8%
BasrahLight2.9%
OmanBlend2.0%
Arab Light 1.09%Arab Medium 2.59%Arab Heavy 2.87%
Jeddah3.3%SHFO
Fuj3.0%HFO
Typical Middle East Qualities
• Compliant MGO or AGO available in main ports (0.05% -0.1% S)
• Some ports MGO exceed 0.50% S
• HFO Sulphur Content higher than 0.5%
Fuj MGO0.10 %
JeddahMGO0.7-0.9 %
RastanuraMGO<0.05 %
Source : OPEC World Oil Outlook 2015 / Veritas Petroleum Services
Using Fujairah / Khorfakkan as an example :
Fujairah & KFK is estimated to be ~75 % of the bunker
market in the ME
11 Mn MT p/a ~ 190k bbls/d HFO will not meet
Global Cap
15 Mn MT p/a ~ 250k bbls/d across the ME
Significant Supply Chain changes will have to occur
in the Middle East
How will the Industry Adapt ?
ME Options & Alternatives
• Use existing and projected Distillate Pool of AGO / MGO ?
• 400-500k b/d surplus of Distillate in the Region by 2020
• Inevitable slippage of refinery upgrading projects should not prevent avails.
• ‘’Pockets” of unavailability of compliant Distillates
• Flash Point generally SOLAS compliant but seen to be close to specs
• Qualities generally good. *Care always with cold flow if future operation in colder climes
• Stowage & Housekeeping on board will come under renewed scrutiny
Source : OPEC World Oil Outlook 2015
ME Options & Alternatives
• Refinery Upgrades– Globally the Middle East is very
active with only China expected to increase conversion capacity more in run up to 2020 globally
– Estimated 0.5 mb/d Conversion capacity to be added
– Estimated 0.7mb/d Desulphurization capacity to be added in ME by 1st Jan 2020
– Influence of Iran cannot be underestimated
2016 200 kb/d
2019 425 kb/d
2017 0 kb/d*
2018 50 kb/d
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+Looking Further Ahead
2020/1- 933 kb/d
+
+
+
+
+
+
– Further 0.9 mb/d desulphurization capacity to be added in ME during 2020 & 2021
– Caveats……..
Source : OPEC World Oil Outlook 2015 / IAE
So its Possible….?
CAUTION
– ME is predominantly an Export Market
– Desulphurization additions also include Gasoline (EU5)
– Marine (as always) will be last to benefit from Desulphurization in Refineries
BUT
– Good News is we (ME) do have a projected Surplus
– Potentially much more competitive as a region – No Freight / Importing
DON’T FORGET
– A Truly GLOBAL cap…
– Be in no doubt NOT same picture globally
– Generally acknowledged a major challenge if 2020 occurs with significant tightness of product expected.
Source : OPEC World Oil Outlook 2015
Options and Alternatives
Question : Will we simply blend existing HFO ?
• Complex Blending
• Limited economical blending component
• Quality Issues, Unstable fuels
• “As is” Residual barrels are largely not usable
• Little or no possibility of safely blending existing HFO with suitable economic blendstocks
• Confidence that distillate will assume main role in Bunkering
• ME distillate Surplus and incoming Refinery upgrades investment make this possible
• Pockets of unavailability but in general ME region is swimming with compliant Distillate
• Opportunities to grow market share with competitive prices
• Drivers out of the control of this audience
• Watch this space…..
Middle East Conclusions
Thank you
Cockett Marine Oil Group | www.cockettgroup.com Tel: +971 4 4255 100 (Bunkers)| Fax: +971 4 4255 111 | Email: [email protected]