Sammendrag
Dr Elizabeth Lindstad from Norwegian marine research organisation Sintef Ocean, points out that the price differential between HFO and low sulphur alternatives will increase with higher crude prices, and narrow with lower ones. This is because as well as the fixed costs required to convert crude into low sulphur product compared to HFO, such as boiling, cracking and heating at high temperatures, there is also an energy cost to the conversion. “We need extra energy to convert HFO into a low sulphur fuel. It’s an energy demanding process. If we put in 100kl energy, we might get out 85kl,” she told Fairplay. “If the oil price goes down to $25/bl again, then the diesel price becomes more competitive. But if it rises, then scrubbers will benefit.”
She also notes that as we have approached the implementation date of the sulphur cap, price estimates for low sulphur fuels have come down. “If we go back to 2016 we saw reports that the price differential would jump to the roof. But it was very much based upon that assumption that diesel [MGO] would be the only alternative.” Since then refineries have launched several residual-based low sulphur fuels that are expected to be priced significantly below MGO, which Lindstad believes in a response to the fact that scrubbers are an extremely cost-competitive compliance option. “Without the scrubbers, the refineries could have produced diesel at a much higher price. Instead of providing low sulphur fuels at a competitive price versus scrubbers for a large share of the fleet.”
She also notes that as we have approached the implementation date of the sulphur cap, price estimates for low sulphur fuels have come down. “If we go back to 2016 we saw reports that the price differential would jump to the roof. But it was very much based upon that assumption that diesel [MGO] would be the only alternative.” Since then refineries have launched several residual-based low sulphur fuels that are expected to be priced significantly below MGO, which Lindstad believes in a response to the fact that scrubbers are an extremely cost-competitive compliance option. “Without the scrubbers, the refineries could have produced diesel at a much higher price. Instead of providing low sulphur fuels at a competitive price versus scrubbers for a large share of the fleet.”