The International Maritime Organization (IMO), the governing body of international shipping, has made a decisive effort to diversify the industry away from HFO into cleaner fuels with less harmful effects on the environment and human health. Effective in 2015, ships operated within the Emission Control Areas (ECAs) covering the Economic Exclusive Zone of North America, the Baltic Sea, the North Sea, and the English Channel will begin to use Marine Gas Oil (MGO) with allowable sulfur content up to 1,000 ppm. Starting from 2020, ships sailing outside ECAs will switch to Marine Diesel Oil (MDO) with permitted sulfur content up to 5,000 ppm.
The Implications of Residual Fuel Phaseout
Projects like those of ExxonMobil and Neste, in which refiners shift to more distillates production, are likely to appear more frequently outside of the US, which has a higher accumulation of refineries with coking capabilities.
"The US has made a massive conversion to cokers because of its use of the very heavy Caribbean grades of crude, like those from Venezuela and Mexico, and now from Canada," Mayes said. "The Eastern Hemisphere has not built this type of infrastructure, but this will likely stimulate that."
US residual fuel yield was about 3% in 2013 compared with "15.2% for the rest of the world," Turner Mason said in a 2013 report.