“It will drastically change the crude diet of refiners,” said HPCL’s former head of refineries, BK Namdeo, said of the shipping change.
Sources in South Korean and Japanese refining industries said companies are examining a shift toward lower sulphur crude, while European refineries will eschew heavier grades for lighter North Sea and West African crudes that are readily available.
Still, as the oil market rushes to prepare, the shipping industry could crush their best-laid plans; scrubbers, which cost $3-$10 million to retrofit onto existing vessels, are becoming more standard on new ships. And the expected sharp drop in fuel oil prices could make the investment worthwhile.
“If the shipping industry invests quickly, by 2025 the demand for fuel oil could be back,” Gelder said. (Additional reporting by Nidhi Verma in New Dehli, Roslan Khasawneh, Jessica Jaganathan and Mark Tay in Singapore, Jane Chung in Seoul, Osamu Tsukimori in Japan, Jarrett Renshaw in New York and Ron Bousso and Ahmad Ghaddar in London, editing by David Evans)