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21-01-2020

European refineries are the least prepared as IMO 2020 regulations loom large

European refineries expect the largest impact from new IMO 2020 regulations, yet just 23% of these refineries are focussing on operational improvements targeting higher availability to make low sulphur fuels, according to a global study of senior employees in the refining industry, commissioned by Aspen Technology, a global leader in asset optimisation software.

The survey also revealed a shortfall globally in refineries with this focus on clean fuels, with just 37% claiming to be doing that as a result of IMO 2020.

However, four out of ten (43%) refineries globally are focusing on operational improvements targeted at improved overall utilisation, relying on digital investment to secure operational efficiency improvements, with mid-sized refineries focussing on this most, in a ‘survival of the fittest’ battle in the lower quartiles.

Nearly two-thirds of oil refineries, globally, (64%) have not made any capital expenditure against IMO 2020 regulations which came into effect on 1st January.

The study also found that refineries expect fuel oil production is likely to fall as a result of IMO 2020, with more than a third (34%) of refineries globally expecting to produce less fuel oil in 2020, while just 24% expected to increase production.

Ron Beck, Industry Marketing Director at AspenTech, said: “We are in a challenging period, but there are still many margin improvement opportunities refineries can make. There are two clear options to help them compete: operational improvements to increase utilization or increased availability.  Today’s technology can improve both.”

Beck added: “Given the overall reduction in production that IMO 2020 is likely to bring, fuels that enable shippers to comply will be comparatively more valuable in the market. It’s concerning that most refineries are failing to focus on improved utilisation. Such investment is becoming ever more urgent as IMO 2020 approaches. Digital approaches can significantly help operators who have yet to decide on capital investments”

Additional/ supporting key findings:
* The study also discovered that a third of refineries (33%) are upgrading equipment to process higher sulphur oil. Only 29% of plants are shifting to use lower sulphur crude slates to help cope with the regulation.
* It appears likely that fuel oil production could fall as a result of IMO 2020, with more than a third (34%) of refineries globally expecting to produce less fuel oil in 2020, while just 24% expected to increase production
* BPCL Mumbai refinery in India achieved 90% improved sulphur recovery in under six months in 2018 by implementing digital twinning on their sulphur removal processes.

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