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Saudi Arabia Strikes Back In Yemen

Saudi Arabia Strikes Back In Yemen

Saudi Arabia has launched an…

Saudi Aramco To Discontinue Fuel Oil Production By 2024

Aramco

Saudi Arabia’s oil giant Saudi Aramco targets to stop producing fuel oil at its refineries by 2024, as stricter environmental regulations for the shipping industry will significantly cut the largest source of demand for fuel oil, Abdulaziz M. Al-Judaimi, senior vice president of Downstream at Aramco, told S&P Global Platts in an interview published on Wednesday.

The shipping industry is preparing for a major disruption of the types of fuels it will be using as early as the beginning of 2020, when stricter regulations for the sulfur content of fuel come into force. According to the new rules by the International Maritime Organization (IMO), only 0.5-percent or lower sulfur fuel oil should be used on ships beginning January 1, 2020, unless said ships have installed the so-called scrubbers—systems that remove sulfur from exhaust gas emitted by bunkers.

Many ship owners are preparing for the new emission regulations and many ships will stop using fuel oil of above 0.5-percent sulfur content, thus sinking demand for the higher-sulfur fuel oil.

In 2017, Aramco produced 206,000 bpd of fuel oil at its fully owned refineries in Saudi Arabia, according to Platts.

“[Some] 85% of our refining assets are IMO-compliant, meaning that we have 15% of our refining assets requiring further upgrades on the bottom of the barrel,” Al-Judaimi told Platts.

Related: Natural Gas Prices To Remain Low… For Now

Yet, Aramco doesn’t expect a significant negative impact on its business from the IMO regulations, he said. 

“We have lined up all the investment needed to take the vacuum resid off the bottom of the barrel into distillates and gasoline as well as chemicals,” the manager noted.  

While the Saudi oil giant plans to discontinue fuel oil production at its refineries, it has an ambitious plan to double its refining capacity and is heavily investing in refining and chemicals in pursuit of securing more downstream markets for its crude oil, Al-Judaimi said in the middle of 2018.

Aramco, which produces around 10 million bpd of crude oil, aims to increase its refining capacity from 5 million bpd now to 8 million bpd-10 million bpd, and to double its petrochemicals production by 2030, Al-Judaimi said.   

By Tsvetana Paraskova for Oilprice.com

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