Hydrocarbon Processing - January 2022 - 28

Sustainability
Actual prices in 2020. The year 2020
began strong, as researchers predicted,
with VLSFO and MGO reaching their
peak prices. By January 8, VLSFO had
reached $686.50/metric t (tonnes),
MGO reached $732/metric t, and HSFO
prices remained stable at $407.50/
metric t, based on the global average
bunker pricing.6
However, by February 2020, the prices
for these products fell-MGO prices
fell almost 9% and VLSFO prices fell
approximately 12%. This is attributed
to the significant quantities of LSFO
(i.e., VLSFO or a mixture of diesel and
fuel oil) in the market at that time.7
spread rapidly throughout the world-
travel was limited globally and many
consumers were required to stay home,
so prices and demand for crude oil and
other products began to sharply decline.8
To exacerbate the problem, a crude
oil price war began between the Organization
of the Petroleum Exporting
Countries (OPEC) and Russia over oil
production cuts, leading to breaks within
the OPEC+ alliance.8
These factors led
Of
course, it is impossible to deny the effects
on global markets caused by the
COVID-19 pandemic and the World
Health Organization (WHO) declaration
of a global health emergency. The
havoc and tragedy caused by COVID-19
to a sharp decline in the prices of crude
oil, VLSFO, MGO and HSFO (shown
in FIGS. 2 and 3). On April 20, the WTI
crude price dropped below $0/bbl due
to limited storage capacities and low liquidity;9
by
the end of the month, the
crude prices of Brent, Kuwait Export
Crude (KEC) and WTI fell to an average
of $18/bbl,10
the lowest in years (FIG. 2).
VLSFO and MGO pricing fell to
$272/metric t and $400/metric t, respectively,
(FIG. 3) which is a loss of approximately
60% for VLSFO and 53%
for MGO from the first week of 2020.6
By May 1, the crude oil price war ended
and prices began showing an upward
curve, reaching $72.99/bbl for Brent,
$72.61/bbl for KEC and $68.50/bbl
for WTI by the end of August, an increase
of approximately 300% for Brent
and KEC and 280% for WTI since their
April 2020 prices. VLSFO and MGO
prices reached $567.5/metric t and
$663/metric t, respectively-still a drop
from the beginning of 2020, but a gain of
108% and 66%, respectively, from their
low numbers in April 2020. FIGS. 2 and 3
highlight the fluctuating trends of crude
oil, VLSFO and MGO prices since the
beginning of 2020.11,12
Note: The OPEC+ countries have
agreed to increase their production by
400,000 bpd beginning in May 2022,
which will create a huge effect on the oil
and gas markets, from crude oil to its petroleum
products.
KIPIC. Kuwait Integrated Petroleum Industries
Co. (KIPIC) is a subsidiary of
Kuwait Petroleum Corp. (KPC) set up
by the State of Kuwait to manage refining,
petrochemicals, integrated refining
and petrochemicals operations, and
LNG supply that maximizes shareholder
value and achieves LNG import operations
in the Al-Zour complex.
FIG. 2. Crude oil prices.10
Al Zour Refinery. Al Zour Refinery
is designed to process 615,000 bpd of
crude oil. The facility comprises three
topping refineries of equal capacities
and three atmospheric desulfurization
units (ARDSs) for processing atmospheric
residue.
The key objectives of the refinery
are to satisfy future Kuwait Ministry of
Electricity and Water (MEW) LSFO
demand, with the remaining quantity
to be used for export and internal conTABLE
1. ARDS stream properties
Sl no
Properties
1
FIG. 3. MGO and VLSFO prices.
28 JANUARY 2022 | HydrocarbonProcessing.com
2
3
4
5
Specifi c gravity, g/cc
Sulfur, wt%
Viscosity cSt at 50°C
Nickel + vanadium, ppmw
Asphaltenes, wt%
ARDS
stream
0.9292
0.5
175
10.4
2.3
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