It is considered to be the dirtiest and cheapest type of fossil fuel produced from "black gold". Yes, we are talking about fuel oil, which accounts for the lion's share of Russian exports and is one of the main sources of income for oil companies and the country's budget. According to Rosstat, in 2019, Russia produced more than 47 million tons of fuel oil! But 2020 was a year of change in this area of activity. And they, after all, caused a number of problems.
50 shades of Sulfur
It is no secret that fuel oil is actively used in various fields of activity, including marine. It's run by ships. And if earlier the percentage of sulfur in fuel oil could reach 3.5%, new rules of the International Maritime organization at the United Nations (IMO) came into force in 2020. Now you can only refuel ships with fuel oil, where the sulfur content does not exceed 0.5%. The problem is obvious: it is currently difficult for Russia to produce fuel oil that meets these requirements. Analysts say with one voice that Russian oil refining companies are not ready for such changes. To eliminate sulfur as much as possible, the refinery needs to install hydrocracking or Hydrotreating of vacuum gas oils. However, according to Refinitiv Kortes, the total capacity of such plants in Russia is only 17.5 million tons, while the volume of primary processing is more than 270 million tons per year.
A logical question arises: what should shipowners do in this situation? Diesel fuel is an unsuccessful replacement for fuel oil. It is not only more expensive, but also poorly suited for marine engines that require more viscous fuel. Therefore, there are two options: use low-sulfur fuel or install a scrubber on the ship (a device for cleaning solid or gaseous media from impurities in various chemical processes) and continue to purchase fuel oil with a high content of sulfur. According to experts, at the beginning of 2020, scrubbers have already been installed and ordered for about 3,500 vessels, and by 2025, it is likely that about 15% of the world's fleet will go with scrubbers. Therefore, the demand for sulfur fuel oil is still maintained. According to Reuters, 60% of 33 refineries are going to continue producing it.approximately 15% of the world's fleet will go. Therefore, the demand for sulfur fuel oil is still maintained. According to Reuters, 60% of the 33 refineries.
Excise duty in the crown
The percentage of sulfur in fuel oil for refueling ships is not the only innovation. On April 1, Russia adopted an excise tax on fuel oil, which should help in the fight against fakes in the fuel market. The tax code made an exception only for fuel oil with a certain viscosity and aromatics (with a density higher than 1015 kg / m3 or an aromatics content of more than 30%). And it would not be so bad if the introduction of excise duty did not coincide with the peak of the coronavirus.
Consumers of fuel oil (industrial enterprises and energy companies that use it for the production of heat and electricity), because of the virus, found themselves in an economically difficult situation, proposed to postpone the date of entry into force of the excise tax. However, the Ministry of Finance disagrees with this: "the Implementation of this proposal not only has the risks of using excise tax evasion schemes for other types of fuel, but also may lead to losses of budget revenues of the budget system of the Russian Federation, the sources of compensation for which are not defined." What is wrong with excise duty and who really needs to worry?
According to analysts, the most painful impact of the excise tax will be on metallurgical enterprises and producers of mineral fertilizers operating in the North of Russia. For example, Severstal's raw material assets consume almost 170,000 tons of fuel oil daily! They will have to spend an additional 1.5 billion rubles annually to pay the excise tax on fuel oil. The amount is significant; don't you agree? Agriculture, shipping and the railway industry will also suffer.
"The risk of stopping diesel power plants used mainly in the Far North and hard-to-reach settlements is of great concern. There is no alternative to fuel oil. Every year Russia consumes 14 million tons of fuel oil, that is, the cost of enterprises for this fuel will increase by 130-150 billion rubles" - the comment of the Director of ACRA (Russian rating Agency), which he gave to Vedomosti.
In this situation, companies that are already in difficult economic conditions are waiting for a well-thought-out, adequate solution that will prevent adverse consequences for them. In the meantime, we can only watch how the fuel oil business is developing and hope for the best.