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Preparing for IMO 2020 Price Shocks: Strategic Implications


 

FGE’s detailed assessment of the upcoming IMO bunker specification changes uses our proprietary bottom-up supply and demand models as a foundation for examining the options available to both shippers and refiners as well as the likely overall outcomes of these changes in unparalleled depth.

On January 1st 2020, the IMO (International Maritime Organization) will be implementing a cap on the amount of sulphur in fuel oil used on board ships (without exhaust gas cleaning systems—or scrubbers). This upcoming bunker specification change will be the biggest upheaval the refining and shipping industries have ever faced. Indeed, it will have an impact on everyone involved in the supply of fuel oils, from crude oil producers to traders and terminal operators.

Grappling with shifting regulations, changing fuels, and new technologies, it is imperative that ship-owners, refiners, and other key stakeholders along the marine fuel supply chain stay at the forefront of market analysis and understanding. The capital budgeting decisions made today need to be seen in the context of not only 2020 but also for the next 20-25 years.

In a world where there is no “one size fits all” solution, FGE’s analytical approach looks to move the debate and analysis forward. Market-leading refining analytics and an understanding of fuel qualities/specifications are married to an in-depth understanding of the implications for the shipping industry that helps to understand the problem from all perspectives.  

Scope of Coverage

Implications for refiners
  • To what extent will the IMO specification changes impact the refining sector?
  • Impact of IMO on downstream oil product balances and corresponding shift in refinery yields required to balance the market.
  • HSFO disposal - Will there be a surplus of fuel oil? If so, where can it go?
  • Refinery investments and upgrading - Where are upgrading projects taking place?
  • Global oil demand by product/sector.
  • Global refining capacity changes (to 2025).
  • Long-term crude price outlook.
  • Long-term crude quality outlook.
  • Who are the winners and losers?
Implications for the Shipping Sector:
  • What is the proposed outcome? Will shipping companies opt for near-term quick solutions such as:
    • Use LSFO (low sulphur fuel oil) or marine gasoil (MGO),
    • Install exhaust gas cleaning systems (also known as scrubbers) and run HSFO (high sulphur fuel oil),
    • Run other fuels such as LPG and LNG.
  • LSFO supply, demand, and pricing outlook.
  • HSFO supply, demand, and pricing outlook.
  • Will new ships now come with scrubbers by default?
  • Scenarios around scrubber uptake vs. compliance and its impact on the bunker fuel demand slate.
  • Availability and price of alternative fuels (LNG and LPG).
Structure:
  • Part 1: Overview of IMO Ruling and Evaluation of Ship- Owner’s Options Post-2020
  • Part 2: Global Bunker Demand Outlook and Availability of Alternative Fuels
  • Part 3: Implications for Downstream Oil and Shifts in Long-Term Fuel Prices
  • Part 4: Strategic Implications for Refiners
  • Part 5: HSFO Disposal - Global Oil Use for Power Generation Sector

 

Interested in finding out more?

Further information on this study can be found by downloading our latest brochure.

 

Download Brochure

Deliverables

  • PDF copy of the report (in PowerPoint format).
  • Extensive supplementary excel data sets.
  • FGE consultants will be available to discuss the findings of the report either by telephone/WebEx or similar facilities

This Study will add value to

Ship-owners

  • Making capital budgeting decisions on their existing fleet as well as investments in new technologies and propulsion systems 

Charterers

  • Examining fuel procurement strategies and seeking to manage fuel price/quality risk

Refiners

  • Assessing the impact on their own margin economics in 2020 and beyond and the demand for marine bunker fuels

Storage/Terminal Operators

  • Preparing terminal operations ahead of 2020 as well as understanding the competitor landscape for bunkering operations.

Bunker Fuel Suppliers/Traders

  • Investigating the pricing of fuels ahead of 2020 to understand blending economics

Crude Oil Traders

  • Reviewing opportunities/risk management strategies across the barrel in 2020, as well as shifting crude trade patterns

Crude Oil Producers

  • Looking at sweet/sour and light/heavy differentials

Financiers

  • Considering investment opportunities and returns on investment around IMO 2020 and beyond

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Data

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Further Information

If you require additional information on this or any FGE service, including requesting a trial, or you would like to discuss ways in which FGE can assist you further, please contact a member of our sales team:


Mr. Robert Beckmann - Singapore

Head of Business Development
Tel: +65 6222 0045

Email Robert

Mr. Edo Ndeke - London

Business Development Manager
Tel: +44 (0) 20 7726 9570

Email Edo

Mr. Farhan Sulaiman - Singapore

Business Development Manager
Tel: +65 6222 0045

Email Farhan

Mr. Lance Ruxton - London

Business Development Manager
Tel: +44 (0) 20 7726 9570

Email Lance

Ms. Iren Naseri - Dubai, UAE

Business Development Manager
Tel: +971 4 457 4270

Email Iren

Mr. TJ Braziel - Houston, TX

Business Development Manager
Tel: +1 (281) 819 1983

Email TJ

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