‘Russian oil sector to be biggest loser financially’

MOSCOW: Russia is set to suffer the biggest revenue losses from rules mandating cleaner marine fuels from 2020 because the world’s top exporter of the sulphurous residual oil that powers ships doesn’t look prepared for the change.

Refineries across the world are bracing for the once-in-a-generation shift, intended to reduce pollution caused by ships. While plants in Europe and the United States Gulf Coast seem well-positioned to make the change to low-sulphur output, Russian companies have done little to prepare.

“Russia’s oil segment appears to end up among the biggest losers financially,” said IHS Markit Ltd’s senior research analyst Alexander Scherbakov.

There was “no chance for them to be 100 per cent prepared” when the new rules kick in, so Russia’s sulphur-rich fuel oil would sell at a widening discount, he said.

In 2020, the lost revenue could amount to US$3.5 billion (RM14.63 billion), according to Wood & Co Financial Services AS.

That’s more than a third of the roughly US$9 billion in revenue Russian suppliers received from fuel oil exports last year, according to Bloomberg calculations based on Russian Customs data.

The regulations prepared by the International Maritime Organisation, commonly known as IMO 2020, mean ships must either purchase low-sulphur fuel or install scrubbers that remove the pollutant from their exhaust gases.