UPSTREAM | MIDSTREAM | DOWNSTREAM | FUEL & TRANSPORT
Global Fuel Quality Developments
Anas Abdoun
Analyst
12th Global Partners Meeting of the Partnership for
Clean Fuels and Vehicles (PCFV)
March 5-6, 2019
Paris, France
DISCLAIMER
This Presentation contains forward-looking statements, including, but not limited to, statements regarding the value and
effectiveness of Stratas Advisors’ services, that involve risks, uncertainties, assumptions and other factors which, if they
do not materialize or prove correct, could cause Stratas Advisors results to differ materially from those expressed or
implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that
could be deemed forward-looking statements, including statements containing the words "predicts," "plan," "expects,"
"anticipates," "believes," "goal," "target," "estimate," "potential," "may", "will," "might," "could," and similar words. Stratas
Advisors intends all such forward-looking statements to be covered by the safe harbor provisions for forward-looking
statements contained in Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. Actual
results may differ materially from those projected in such statements due to various factors, including but not limited to:
risks and uncertainties inherent in our business; our ability to attract new customers and retain existing customers; our
ability to effectively sell, service and support our products; our ability to manage our international operations; our ability to
compete effectively; our ability to develop and introduce new products and services or enhancements to existing
products; our ability to continue to promote and maintain our brand in a cost-effective manner; our ability to manage
growth; our ability to attract and retain key personnel; the scope and validity of intellectual property rights applicable to
our products; adverse economic conditions in general and adverse economic conditions specifically affecting the markets
in which we operate.
Past performance is not necessarily indicative of future results. The forward-looking statements included in this
presentation represent Stratas Advisors views as of the date of this presentation. Stratas Advisors anticipates that
subsequent events and developments will cause its views to change. Stratas Advisors undertakes no intention or
obligation to update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise. These forward-looking statements should not be relied upon as representing Stratas Advisors views as of any
date subsequent to the date of this presentation.
© 2019 Stratas Advisors. All rights reserved. Stratas Advisors are trademarks or registered trademarks of Hart Energy
Publications, LLLP in the U.S. and other countries. Other company names, product names and company logos
mentioned herein are the trademarks, or registered trademarks of their owners. This material may not be published,
broadcast, or distributed in whole or part without express written permission of Stratas Advisors.
© Stratas Advisors. All rights reserved. 2
© Stratas Advisors. All rights reserved. 3
Agenda
Global Overview and Top Markets
Gasoline Quality Trends – Octane
Gasoline and Diesel Quality Trends – Sulfur
Vehicle Emissions and Fuel Efficiency
Summary and Q&A
© Stratas Advisors. All rights reserved. 4
Global Fuel Specifications What You Get
• Access to an extensive and frequently
updated database of fuel
specifications for 150-plus countries
and a wide range of fuels: gasoline,
diesel, ethanol blends, biodiesel
blends, ethanol, biodiesel, butanol,
CNG, LNG, LPG, DME, methanol,
methanol blends, marine, jet,
kerosene, fuel oil, additives
• Regular updates and analysis on
regulatory and policy changes that
drive fuel specs and emission
standards; includes assessments of
emissions related to transportation
(marine, road, air) and fuel efficiencies
• Impacts of climate and air quality
issues on transportation fuel quality
• Interactive webinars
• Direct access to our analysts
• Worldwide Fuel Specifications Book
• Access to our analysts' maps and
presentations from industry
conferences
• Available as an add-on: Analysis of
fuel additives
Keeping up with changes in transportation fuel specifications
and policies is a full-time job. We do it so you don’t have to.
Our fuel quality team scours myriad sources for information to
provide a comprehensive view of fuel markets in 150-plus
countries. You can rely on our expert guidance for help with:
• Regulatory compliance: Understand the framework for your
operations
• Strategic planning: Identify opportunities and challenges stemming
from policy changes
• Capex planning: Position resources to gain advantages
• Competitive assessments: Know what your rivals know
• Supplementing in-house databases and analyses
Global Overview and Top Markets
© Stratas Advisors. All rights reserved. 6
Regulatory developments occurring globally primarily for sulfur
Global Overview
• Overall
– Gasoline: Regulatory activity focuses on sulfur, octane and to a lesser extent, benzene,
aromatics, olefins, RVP
– Diesel: Regulatory activity focuses on sulfur, cetane and to a lesser extent, density, lubricity,
polyaromatics, cold flow
– Lesser regulatory activity on other parameters, but are also important in determining fuel quality
• Sulfur
– Worldwide limits range widely from 10 ppm to 10,000 ppm
– Several countries to reduce sulfur to 10 ppm or 50 ppm within the next five years
– A number of countries plan to leapfrog from very high sulfur limits to low ones
– On the other hand, larger countries follow the traditional route of reducing first to 150/350 ppm,
then 50 ppm and eventually 10 ppm (e.g. China, India, Russia)
• Octane
– Emerging issue with sulfur reduction being implemented
– MTBE and ethanol are most common enhancers
• Cetane
– Most common cetane number is set at a minimum of 51, while the most common limits for
cetane index range between 43 and 46
• Vehicle Emissions and Fuel Economy
– New emission standards ranging from Euro 4/IV to 6/VI to be implemented in the next 5 years
– Next round of fuel economy targets to be implemented in 2020
© Stratas Advisors. All rights reserved. 7
Many of these countries have set fuel specs, vehicle emission and/or fuel economy standards
Top Gasoline and Diesel Markets
Notes:
Top markets highlighted in blue throughout this presentation.
(1) Volumes include ethanol and other blending components such as ethers.
(2) Volumes include biodiesel (as FAME, HVO, etc.) and GTL diesel where applicable.
Source: Stratas Advisors, January 2019
Rank No. Country 2016 Gasoline
Demand(1)
(thousand b/d)
Rank No. Country 2016 On-Road Diesel
Demand(2)
(thousand b/d)
1 U.S. 8,330 1 U.S. 2,335
2 China 2,681 2 China 2,023
3 Japan 893 3 India 1,084
4 Mexico 820 4 Brazil 694
5 Russia 805 5 Germany 668
6 Canada 746 6 France 637
7 Indonesia 574 7 U.K. 504
8 Saudi Arabia 569 8 Japan 438
9 India 567 9 Italy 434
10 Brazil 539 10 Spain 426
Sulfur
Gasoline and Diesel Quality Trends
© Stratas Advisors. All rights reserved. 9
Maximum Sulfur Limits in Gasoline, 2019 Fiji implemented 50 ppm since January
Legend:
0-10 ppm
11-30 ppm
31-50 ppm
51-150 ppm
151-500 ppm
501-3,500 ppm
No information /
Not regulated Source: Stratas Advisors, February 2019
Countries may apply lower limits for different grades, regions/cities, or
based on average content. Detailed information on limits and regulations
can be found at www.stratasadvisors.com.
© Stratas Advisors. All rights reserved. 10
Legend:
10-15 ppm
16-50 ppm
51-350 ppm
351-500 ppm
501-2,000 ppm
2,001-10,000 ppm
No information /
Not regulated
Maximum Sulfur Limits in On-Road Diesel, 2019
Mexico required 15 ppm since January 2019 except for Bajio-Centro region
Countries may apply lower limits for different grades, regions/cities, or
based on average content. Detailed information on limits and regulations
can be found at www.stratasadvisors.com.
Source: Stratas Advisors, February 2019
© Stratas Advisors. All rights reserved. 11
Country 2019 2020 2021 2022 2023 Likelihood of implementation Reason for delay, if any
AFRICA
Benin G: 3,500 150 ppm
D: 3,500 50 ppm Unlikely
Delayed from 2017 to allow
time for oil companies to
dispose of existing stocks
and to renegotiate current
supply contracts
Nigeria G: 150 ppm1
D: 50 ppm1 Unlikely
Fuel importers adding
pressure on the risk of price
increase. Also, inventory of
higher sulfur fuels have to be
depleted before 50 ppm can
be imported, resulting in
delay from July 2018 to
2019.
ASIA PACIFIC
India G/D: 50 10 ppm Unlikely Refinery upgrading and
timely distribution
Indonesia
G: 500 50 ppm
(between 2021-2024) Unlikely
Refinery upgrading and
timely distribution
D: 2,500 500
ppm2 Likely -
Malaysia
G: 500 50 ppm
(RON 95)
D: 500 10 ppm
Likely -
Changes to RON, AKI, metal content, benzene, olefins, RVP, distillation and oxygen also expected
Outlook on Gasoline and Diesel Sulfur Limits of Select Countries in
Africa and Asia Pacific and their Likelihood of Implementation
Notes: Red – confirmed. Brown – proposed. G: gasoline. D: diesel.
(1) Imports only
(2) Solar 48 grafe
Source: Stratas Advisors, February 2019
© Stratas Advisors. All rights reserved. 12
Reduction to 50 ppm and below for a total of 20 countries
Outlook on Gasoline and Diesel Sulfur Limits in Other
Regions and their Likelihood of Implementation
Notes: Dark red – implemented. Red – confirmed. Brown – proposed. G: gasoline. D: diesel.
(3) Refinery limits of 500 ppm.
Source: Stratas Advisors, February 2019
Country 2019 2020 2021 2022 2023 Likelihood of
implementation
Reason for delay, if
any
EUROPE
Bosnia &
Herzegovina G/D: 50 10 ppm Likely -
LATIN AMERICA
Mexico D: 500 15 ppm
Implemented since
January 2019 except
for Central Bajio
region
Refinery upgrading and
timely distribution
MIDDLE EAST
Iran
G: 1,0003 50
ppm
D: 10,0003 50
ppm
Unlikely Refinery upgrading and
timely distribution
RUSSIA & CIS
Uzbekistan G/D: 500 10
ppm Unlikely
Refinery upgrading and
timely distribution
© Stratas Advisors. All rights reserved. 13
Maximum Sulfur Limits in Gasoline, 2025 Malaysia and Vietnam to require 10 ppm by this time
Legend:
0-10 ppm
11-30 ppm
31-50 ppm
51-150 ppm
151-500 ppm
501-3,500 ppm
No information /
Not regulated Source: Stratas Advisors, February 2019
Countries may apply lower limits for different grades, regions/cities, or
based on average content. Detailed information on limits and regulations
can be found at www.stratasadvisors.com.
© Stratas Advisors. All rights reserved. 14
Legend:
10-15 ppm
16-50 ppm
51-350 ppm
351-500 ppm
501-2,000 ppm
2,001-10,000 ppm
No information /
Not regulated
Maximum Sulfur Limits in On-Road Diesel, 2025
Malaysia and Vietnam to require 10 ppm by this time
Countries may apply lower limits for different grades, regions/cities, or
based on average content. Detailed information on limits and regulations
can be found at www.stratasadvisors.com.
Source: Stratas Advisors, February 2019
Octane
Gasoline Quality Trends
© Stratas Advisors. All rights reserved. 16
>50% market penetration in 1996 decreased to nearly 0% today
Lead Phase-out Status
Source: Stratas Advisors, 2019 Legend:
Lead free
Lead in use
1996 2019
© Stratas Advisors. All rights reserved. 17
Regular grade dominates gasoline pool (RON≤95)
Current Market Share of Gasoline Grades by Octane (in %)
Country/Region RON < 91 RON = 91 91 < RON < 95 RON = 95 95 < RON < 98 RON ≥ 98
China <1 - 75-80 20-25 - <1(1)
India - 99.9 - - <0.1(1) -
Indonesia 80.2 - 18.7 1.1
Japan 88.5 - - - - 11.5
Russia 3.7 - 63.2(2) 32.1 - 1.0
Saudi Arabia - 60 - 40 - -
AKI(3) min. AKI = 87 min. AKI = 89 min. AKI ≥ 91
Brazil >99 - <1
Canada 91.7 0.4 7.9
Mexico 84.7 - 15.3
U.S. 87.1 1.6 11.3
Notes:
1) Select cities
2) Grade A-92
3) AKI = (RON+MON)/2
Source: Stratas Advisors, 2019
© Stratas Advisors. All rights reserved. 18
MTBE and ethanol most common enhancers used
Current and Future Octane Enhancers Used
Source: Stratas Advisors, April 2019
Rank No. Country Current Octane Enhancers Used Future Octane Enhancement
Options
1 U.S. Ethanol(1) Ethanol
2 China MTBE, methanol, ethanol MTBE, methanol, ethanol
3 Japan ETBE ETBE
4 Mexico MTBE MTBE, ethanol
5 Russia MTBE, TAME, ETBE MTBE, TAME, ETBE
6 Canada Ethanol Ethanol
7 Indonesia HOMC(2)(3) HOMC, ethanol, MTBE
8 Saudi Arabia MTBE MTBE
9 India Ethanol Ethanol, methanol
10 Brazil Ethanol Ethanol
Notes:
1) Refiners are required to blend ethanol under the federal Renewable Fuel Standard (RFS2) program. Refiners have taken advantage of the octane increase
ethanol provides, but if there were no requirement to use ethanol under the RFS2 program, many refiners would likely prefer to use reformate, isomerate and
alkylate to enhance octane and not ethanol. Moreover, the variable impact of ethanol blends on volatility has increased the complexity of refining and transporting
gasoline blendstocks.
2) HOMC – high octane mogas component, consisting of mainly reformates.
3) Imported gasoline may contain MTBE.
Vehicle Emissions and Fuel Efficiency
© Stratas Advisors. All rights reserved. 20
Stringent requirements in place for top markets except India, Indonesia and Saudi Arabia
Current Emission Requirements for New Vehicle
Models
Source: Stratas Advisors, February 2019
Legend:
STRINGENT
(Euro 5/V and 6/VI;
U.S. Federal;
Japanese standards)
LESS STRINGENT
(Pre-Euro, Euro 1/I
to 4/IV)
Not regulated
No information
© Stratas Advisors. All rights reserved. 21
Euro 6/VI took effect in 2013-2014; other countries still introducing Euro 4/IV to 6/VI
Outlook for Emission Requirements of New Vehicles in Select
Countries
Source: Stratas Advisors, February 2019
Country 2019 2020 2021 2022 2023
Accompanying
fuel quality
changes, if any
AFRICA
Ghana Euro 4 No
ASIA PACIFIC
China China 6a (LDVs and
municipal buses)
China 6a (all
HDVs)
China 6b (all LDVs
and HDVs) Yes
India Bharat VI Yes
Japan PPNLT(1) (MDVs) No, already at
10 ppm sulfur
LATIN AMERICA
Mexico Euro VI Yes
MIDDLE EAST
Iran Euro 5 (all
vehicles)
Yes, but for 50
ppm
RUSSIA & CIS
EEU(2) Euro 6 for new
certifications
Fuel quality
changes delayed
in Kazakhstan
and Kyrgyzstan
Notes: Dark red – implemented. Red – confirmed. Brown – proposed. HDV – heavy-duty vehicle. LDV – light-duty vehicle. MC – motorcycle. MDV – medium-duty vehicle.
PC – passenger car.
1) Post-Post New Long-Term emission regulation.
2) EEU – Eurasian Economic Union, which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.
© Stratas Advisors. All rights reserved. 22
Policies in place for top markets except Indonesia, Russia and Saudi Arabia
Current Fuel Efficiency Requirements for Gasoline
and Diesel Vehicles
Source: Stratas Advisors, 2019
Legend:
Policy in place
Policy in progress
Voluntary
Not regulated
No information
Summary
© Stratas Advisors. All rights reserved. 24
Rank
No. Country
Setting 50
ppm
Sulfur
Spec?
Setting 10
ppm
Sulfur
Spec?
Increasing Octane?
Setting
New
Emission
Standards?
Setting New
Fuel
Economy
Standards?
1 U.S. Completed Setting min 87 AKI under
discussion
2 China Completed Completed Octane reduction to RON
89/92/95
3 Japan Completed Completed
4 Mexico
5 Russia Completed Completed Legislatively: unlikely Not in near
future
6 Canada Completed Completed
7 Indonesia Replacing RON 88 with RON 90
on the market
Under
discussion
8 Saudi Arabia
9 India Completed
10 Brazil Completed
Sulfur reduction to 10-50 ppm and new emission and fuel economy standards are key focus
Gasoline Spec, Emission and Fuel Economy
Changes Expected in Top Markets
Source: Stratas Advisors, February 2019
© Stratas Advisors. All rights reserved. 25
Rank
No. Country
Setting 50
ppm Sulfur
Spec?
Setting 10
ppm Sulfur
Spec?
Addressing
Cetane?
Setting New
Emission
Standards?
Setting New Fuel
Economy
Standards?
1 U.S. Completed
(15 ppm)
2 China Completed Completed
3 India Completed
4 Brazil
5 Germany
Completed Completed Possibly Euro
7/VII
In force for LDVs;
Proposal - most
likely for HDVs
6 France
7 U.K.
8 Japan Completed Completed
9 Italy Completed Completed
Possibly Euro
7/VII
In force for LDVs;
Proposal - most
likely for HDVs 10 Spain
Sulfur reduction to 10-15 ppm nearly complete with stricter emission and fuel economy standards as key focus
On-road Diesel Spec, Emission and Fuel Economy
Changes Expected in Top Markets
Source: Stratas Advisors, February 2019
Bogotá | Brussels | Denver | Houston | London | Melbourne | Mexico City
New Delhi | New York | San Diego | São Paulo | Singapore | Washington, D.C.
We can help you develop a deeper understanding of the developments that are shaping the future of oil & gas. Our support
includes customized consulting that is focused on a client’s specific strategic objectives, competitive challenges and asset base.
Additionally, we offer support through subscription services and comprehensive market studies.
UPSTREAM | MIDSTREAM | DOWNSTREAM | FUEL & TRANSPORT
1616 South Voss Road Suite 675 | Houston, TX 77057 United States | TEL +1.713.260.6426 | stratasadvisors.com
Top Related