September 06, 2017

China and India in the Spotlight of Asia Pacific’s Progress in Sulfur Reduction

Stratas Advisors

This excerpt is from a report that is available to subscribers of Stratas Advisors’ Global Fuel Specifications and Asia services.

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China and India in the Spotlight of Asia Pacific’s Progress in Sulfur Reduction

Over the past year, the top two most populous nations in Asia Pacific (and in the world) – China and India – took the spotlight by implementing stricter sulfur requirements for their transport fuels. This represents a major shift towards lowering sulfur content in fuels in a region that is often plagued by delays in refinery upgrading due to political and market conditions. Several other Asian countries including Pakistan, Singapore and Vietnam have also emulated China and India by implementing stricter fuel specifications in 2016-2017. However, less-developed countries such as Bangladesh, Cambodia and Laos continue to trail behind the rapidly developing and developed nations due to challenging political landscape, poor knowledge on fuel quality and prioritizing supply security over fuel quality. Nevertheless, the Asia Pacific region is slowly but surely, moving towards cleaner fuels and cleaner air.

Sulfur reduction is still at the core of fuel quality policies in Asia Pacific; it is carried out in parallel with various biofuels mandates and targets. MTBE and ethanol continue to be among the region's more popular options to enhance octane in gasoline. For diesel, new biodiesel blending levels beyond B7 are being planned by oil palm-producing countries such as B10 in Malaysia and Thailand, while Indonesia currently requires biodiesel to account for 20% of the total diesel pool. Such increases in blend levels will have a direct impact on the quality of conventional diesel. However, these countries are expected to continue supporting and protecting their oil palm industries by increasing blending levels despite low crude oil prices.

Because there is no coordinating regional structure in Asia Pacific such as that of the European Union (EU), fuel quality specifications and regulations vary substantially from country to country and often between urban and rural areas within countries, especially in China and India. Many have developed fuel specifications based on those implemented in the EU, with the limits of some fuel properties amended to meet domestic conditions. However, each country has its own timeline for moving to more stringent fuel standards. In general, Asia Pacific countries have made significant progress toward improving fuel quality in a relatively short time frame.

Changes Since Last Report

This report updates a previous report, and summarizes changes to gasoline, diesel, and biofuels specifications in 2017 in the Asia Pacific region. An outlook for planned changes in post-2017 fuel specifications is included as well. Full details on fuel quality specifications developments are available under the respective Country Profiles on the Stratas Advisors website.

Since the last report, fuel spec changes have been implemented in China, India, Indonesia, Macau, Singapore and Vietnam while spec changes proposed for implementation in 2016-2017 by New Zealand have been delayed to 2017-2018. Additionally, Pakistan introduced lower sulfur on-road diesel and raised octane in gasoline although its fuel specifications have yet to be revised.

Spec Changes Implemented since the Last Report:

  • China: Specifications for 10 ppm sulfur gasoline (GB 17930-2016) and on-road diesel (GB 19147-2016) were implemented nationwide as of Jan. 1, 2017, while specifications for 50 ppm sulfur off-road diesel (GB 252-2015) were made effective nationwide since July 1, 2017.
  • China-Beijing: Beijing VI fuel specifications (DB11/238-2016 for gasoline and DB11/239-2016 for diesel) came into force from Jan. 1, 2017. However, according to the Ministry of Environmental Protection (MEP), Beijing VI fuels only achieved full coverage in the city since Mar. 1, 2017 due to earlier supply constraints.
  • India: Since Apr. 1, 2017, Bharat Stage IV (BS IV) specifications for gasoline and on-road diesel requiring 50 ppm max sulfur are enforced nationwide.
  • And more.
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