Wood Mackenzie expects demand for marine gasoil (MGO) to rise by more than 1 million barrels per day next year. “There will be a huge amount of middle distillates used in the shipping sector starting 2020, with an incremental demand of 1.2 million barrels per day for marine gasoil (MGO),” said Sushant Gupta, the consultancy’s director of research for the Asia-Pacific refining sector.
Speaking at an industry conference in Singapore, Gupta said the rise would follow the adoption of IMO 2020, the International Marine Organisation (IMO) policy restricting the use of high-sulfur fuel oil (HSFO) as shipping fuel. Many of the shipping firms that are still using HSFO will switch to MGO by January 1, 2020, to meet the IMO 2020 requirements on sulfur content, he explained.
Other marine operators, he said, will choose other fuels. One of those is very low-sulfur fuel oil (VLSFO), which is likely to experience a surge in demand closer to the end of 2019, he stated.
Meanwhile, Gupta said, demand for HSFO is set to plummet next year. World consumption levels are likely to drop from 3.5 million bpd in 2019 to around 600,000 bpd in 2020, he remarked.