For the global refining industry, the challenges ahead will come from numerous directions—volatile oil prices, poor to meager demand growth, new and upcoming mandates for ultra-clean and high-quality fuels, required reductions in plant waste discharge and air emissions, the expanding role of biofuels in the energy mix, and environmental concerns over greenhouse gas emissions. At the same time, refiners must satisfy traditional objectives, such as the need to provide steady fuel supply to consumers, the constant drive to save energy and improve efficiency, and the need for refinery upkeep to maintain safe and reliable operations. On the financial side, refiners must maintain adequate operating cash flows to secure crude supply and to fund revamps and expansions in order to keep up with the competition.
The issues of energy security and tightening environmental requirements will remain urgent in the long run. These challenges are shared by both Organization for Economic Cooperation and Development (OECD) nations, as well as by developing countries in Asia and Latin America, due to concerns about volatile oil prices, diesel supply shortages, biofuels mandates, and the rising threat of global warming. In the Middle East, oil producers are expanding their downstream capacities in the hope of capitalizing on rising global fuel demand, but they are running up against uncertainties in short- and intermediate-term oil consumption forecasts. Environmental and biofuels mandates shaping the global fuel market outlook are summarized in the table below.
|
Country/region |
Gasoline sulfur, ppm |
On-road diesel sulfur, ppm |
Biofuel mandate |
GHG emissions reduction deadline |
|||
|
Current |
Future |
Current |
Future |
Current |
Future |
||
|
US |
15 |
N.A. |
15 (80% of fuel pool) |
15 by 2010 (100% of fuel pool) |
586.8K b/d biofuels (7.76% of fuel pool) in 2008 |
Blending level raised each year until hitting 2.35MM b/d of biofuels by 2022 |
Presidential candidates support 80% cut from 1990 levels by 2050 (Obama) and 60% cut from 1990 levels by 2050 (McCain) |
|
Canada |
15 |
N.A. |
15 |
N.A. |
N.A. |
5% ethanol by 2010, 2% biodiesel by 2012 |
20% cut from 2006-2020, 60-70% cut through 2050 |
|
Latin America/ Caribbean |
400 (ARPEL); 300 (Mexico) |
50 by 2009-2011 (Mexico) |
2K (ARPEL); 5K (Vene-zuela); 500 (Brazil) |
50 by 2009 for metro areas (Brazil) |
23% ethanol (Brazil); 10% ethanol from Oct. 2008 (Jamaica) |
5% biodiesel by 2010 (Brazil); 5% biofuels by 2010 (Argentina); 7.8% ethanol by 2010 (Peru) |
Mexico to cut 200K mt/y of refinery emissions through carbon credits |
|
EU |
50 |
10 by 2009 |
50 |
10 by 2009 |
Blending of biofuels at various levels from 1‑5% |
5.75% biofuels blending by 2010 |
Emissions Trading Scheme demands 20% cut from 1990 levels by 2020 |
|
Eastern Europe/ CIS |
500 (Russia); 500 to 1K (rest of E. Europe) |
N.A. |
500 (Russia); 2‑5K (rest of E. Europe) |
N.A. |
N.A. |
N.A. |
N.A. |
|
Middle East |
N.A. |
N.A. |
500 (Saudi Arabia); 50 to 10K (rest of Middle East) |
N.A. |
N.A. |
N.A. |
N.A. |
|
Africa |
500 (South Africa) |
50 by 2010 (South Africa) |
500 (South Africa); 50 to 3K (rest of Africa) |
50 by 2010 (South Africa) |
N.A. |
2% biofuels in 2013 (South Africa) |
N.A. |
|
Asia-Pacific |
500 (China); 10 (Japan); 50 (South Korea); 350-500 (India); 50 to 2K (rest of Asia-Pacific) |
150 by 2010 (China); 50 by 2010 and 5‑10 by 2015 (India) |
500 (China); 50 (Japan); 30 (South Korea); 500 (India); 10 to 3.5K (rest of Asia-Pacific) |
350 by 2010 (China); 10 by 2010 (South Korea); 350 by 2010 (India) |
10% ethanol used in eight provinces (China); 3% ethanol (Japan); 5% biodiesel (South Korea); 5% ethanol (India); 10% ethanol (New Zealand); 5-10% biodiesel (Malaysia); 10% ethanol, 5% biodiesel (Thailand); 5% ethanol (Indonesia); 5% ethanol (Philippines) |
5% biodiesel by late 2011 (India); 2% biofuels by 2010 (Australia); 8% biofuels by 2011 (Thailand); 10% biofuels by 2010 (Indonesia); 10% ethanol by late 2012 (Philippines) |
Goal to cut emissions by almost 50% on emissions-per-dollar-basis by 2020 (China); 6% cut from 1990 levels from 2008-2012 under Kyoto Protocol (Japan); 60% cut from 2000 levels by 2050 (Australia) |
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