GC refiners may benefit from change

WASHINGTON - The global sulfur emission cap for marine fuels beginning in 2020 will provide a boost for American refiners, especially those on the Gulf Coast (GC) given their emergence as a key exporter of low sulfur refined products, according to John Auers, VP of the refinery consultant Turner, Mason & Co. The International Maritime Organization's decision to reduce sulfur specifications in bunker fuel to 0.5% (from 3.5%) by 2020 will have an impact on refiners, and US refiners are in a good position for the transition, fueled by the US oil production boom and strong refinery runs, says Auers. The move to lower sulfur specifications will cause a significant bump in diesel margins compared with high sulfur fuel oil margins. As a result, the margin between low sulfur (or light sweet crude oils) and heavy (or high sulfur sour crudes) is likely to widen demand for low sulfur products. It is estimated that up to 2M barrels per day of fuel oil will be displaced by lighter streams, especially middle distillates, Auers says. US refiners are key exporters of refined products like gasoline and diesel. (Source: Platts 06/27/17)