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Refiners respond to challenge (ERTC)

It seems that only yesterday European refiners were facing catastrophic decline. With three million barrels of annual capacity taken off-line in the years following 2008, the road ahead had turned into a slippery slope.

Chris Cunningham
Editor of PTQ magazine
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Article Summary
But what a difference stable lower prices for crude, coupled with a recovery in regional economic performance, can make.

Diesel emissions scandal? Electric vehicles? As Europe’s premier meeting for the refining industry made its preparations, further correction in European refining capacity to match dwindling internal demand, along with competition from alternative technologies and expanding Asian suppliers, had receded into the distance.

The talk now is about whether refining capacity in Europe can keep up with internal demand for fuels in the coming years. It is as well to note, despite those stressful recent years, that Europe is a bigger consumer of oil products than the much-vaunted Chinese market. Provided that steady growth continues in Europe’s national economies, especially in central and southern Europe – the comparison is unlikely to change for some time to come.

In his opening keynote presentation, Grigoris Stergioulis, chief executive of ERTC co-host Hellenic Petroleum, is addressing the challenges for a European refiner of maintaining a healthy margin whilst keeping a wary eye on external competition (in this case, Middle East refiners).

Mr Stergioulis will describe some of the practical steps his company is taking to maintain a competitive edge. In light of the morning’s following discussions on marine fuels, there will be interest in the upgrading of a refinery into a modern hydrocracking refinery with zero fuel oil production.

For refiners and their technology providers, tightening environmental legislation is among life’s certainties. Next on the list of clean fuels targets is the 2020 deadline set by the International Maritime Organization for a 0.5% cap on the sulphur content of marine fuels. With just two years to that deadline, techno-economic choices on how to achieve that target need to be made.

In light of the build-up to the new IMO regulations, the choice of Athens as the venue for ERTC 2017 is especially appropriate. The city’s great port, Piraeus, not only has a history of sea-going activity second to none, today it is Europe’s largest sea passenger terminal and a regional leader in container traffic.

The continuing debate about how to reduce emissions from Europe’s marine industry currently concerns whether to consume fuels that are appropriately lower in sulphur, as per the 2020 regulations, or to achieve a similar outcome by exemption. In view of the very high cost of equipment for scrubbing, the smart money is on shippers absorbing the expense of lower-
sulphur fuels.

A major topic for debate at ERTC is how to meet the new target for marine fuels most effectively whilst avoiding currently healthy refinery margins taking too big a hit. Should refiners boost their hydrotreating capacity, for instance, to desulphurise residual fuel oil for blending with gasoils, or add coking capacity to upgrade residue? Or would it be more economically effective to switch to a sweeter crude slate for higher operating rather than capital costs?

The answers, in light of movements in oil prices, global markets and geopolitical trends, are best left to the experts on the opening morning of ERTC’s presentation sessions when an IMO keynote presentation and panel discussion will examine the specifics and wider issues of further reducing sulphur in fuels.

This short article originally appeared in the 2017 ERTC Newspaper, produced by PTQ / DigitalRefining.

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