BAKU, Azerbaijan, Jan.29
By Leman Zeynalova – Trend:
Liquid renewables are to be one of the hottest topics for 2021, with many more announcements expected, Trend reports with reference to Wood Mackenzie.
The company said in its latest report that the Energy Transition and the aspirations of many integrated oil companies to achieve carbon neutrality offers some hope to refining sites under threat of closure.
“The traditional closure route for a refinery is conversion into a terminal, so retaining a role in the distribution infrastructure for liquid fuels. Now, there is the opportunity to re-purpose these facilities to also produce liquid renewables. California’s Low Carbon Fuels Standard is supporting such conversion to produce renewable diesel, pulling in materials from all over the world, not just the US.
Feedstock selection is key, as the availability of preferred feedstocks, such as used cooking oil, is limited. Material policy moves by Asian countries to support local biodiesel production and use could be disruptive to other regions, such as Europe, so is something to watch out for,” said the company.
2020 was a truly horrific year for the global refining industry, with global utilisation plummeting from over 80% in Q4 2019 to 66% for Q2 2020. Wood Mackenzie’s global composite gross refining margin collapsed to under US$1/bbl for Q3 2020, as the high product inventories built in Q2 2020 limited the impact of demand recovery.
The OPEC+ group further compounded the woes of refiners by restraining production to restore the oil market to balance, which disrupted crude differentials. Refinery closures/restructuring were a key feature of 2020 across Europe, Asia and the Americas, but these closures did little to lift margins given the scale of the demand collapse.
Refining margins did recover further in Q4 2020, to match Q4 2019 levels, themselves depressed by the transition to low sulphur bunker fuels as required by the IMO regulatory change. The impact of the IMO regulatory change was to introduce more gas oil into the bunker fuel mix, but this incremental clean product demand was overwhelmed by the impact of the pandemic.
Follow the author on Twitter: @Lyaman_Zeyn