* Sulphur in diesel to be lowered to 50 ppm; gasoline to 150
* New standards could absorb low-sulphur glut next year
By Jessica Jaganathan
SINGAPORE, Aug 29 Plans for five countries in
East Africa to adopt cleaner fuel standards in 2015 are likely
to help absorb excess low-sulphur oil products coming out of
Middle East and Indian refineries, where new capacity is being
added, industry sources said.
Kenya, Tanzania, Uganda, Burundi and Rwanda are due to
switch to the cleaner fuels from January 2015, according to
documents posted on the websites of the regional
intergovernmental organization East African Community (EAC) and
the United Nations Environment Programme (UNEP).
The fuel switch would come just as refiners in OPEC
countries and India install secondary units and new oil plants
to produce ultra-low sulphur fuels that meet tighter European
environmental standards, worsening a supply glut of the higher
grades of transport and industrial fuels.
The East African plan to burn low-sulphur diesel and
gasoline would open a new market for these refiners, who now
compete with U.S. and Russia to supply Europe, traders said.
"There is an oversupply of (ultra-low sulphur) diesel ...
and the situation will only get worse in terms of oversupply
once Ruwais and Yanbu's new capacity is online," said a
Singapore-based middle distillates trader.
Abu Dhabi National Oil Co (ADNOC) is expected to double the
capacity of its Ruwais refinery from 415,000 barrels-per-day
(bpd), with an expansion to be completed late this year. Yanbu
Aramco Sinopec Refining Co is likely starting its new 400,000
bpd refinery by the first quarter of next year.
They would join Saudi Aramco Total Refining and
Petrochemical Company's (SATORP) new 400,000 bpd Jubail refinery
which started operations last year, and Reliance Industries'
export-focused 580,000 bpd Jamnagar plant in India, in
producing ultra-low sulphur refined products.
Currently, these refineries are competing to supply to
Europe as the majority of Asian countries outside of Japan and
South Korea are still using higher sulphur fuels.
NEW SPECS FOR EAST AFRICA
The EAC countries have been discussing their switch to euro
IV standards for diesel and euro III standards for gasoline for
the past couple of years, working in conjunction with UNEP with
the aim of reducing harmful emissions and improving air quality.
Under the changes in specifications, the five East African
countries have to lower sulphur content in diesel from 500
parts-per-million (ppm) to 50 ppm, according to EAC and UNEP
documents and conference presentations.
For gasoline, the EAC countries have to lower sulphur
content from 1,500 ppm to 150 ppm. They also have to drop lead
content and maximum density slightly.
EAC officials did not reply to e-mails seeking information
on whether the implementation of the new standards is on track
and will go forward on schedule.
But oil importers in Kenya and Tanzania have told suppliers
they need to be prepared to supply the low-sulphur fuel from the
start of next year.
Kenya and Tanzania import about 600,000 to 670,000 tonnes of
diesel and gasoline every month - about 170,000 bpd - for their
own needs and to export to their landlocked neighbours,
according to traders who regularly participate in monthly
tenders issued by companies that handle the imports.
Diesel is mainly supplied from India and the Middle East
while the gasoline comes from the Mediterranean and Fujairah,
the traders said.
Kenya's diesel and gasoline imports are set to rise by a
third over this year and next, driven by a growing auto fleet
and rising industrial activity and because the country's sole
refinery shut last year.
(Additional reporting by Seng Li Peng; Editing by Tom Hogue)