In 2020, India and Malaysia were the only countries in Asia Pacific which managed to implement stricter specifications for gasoline and diesel despite the COVID-19 pandemic sweeping across the globe. Despite Malaysia successfully reducing the sulfur limit for its RON 95 gasoline grade from 500 ppm to 50 ppm sulfur max nationwide since Jan. 1, 2020, it failed to meet the Sep. 1, 2020 deadline for 10 ppm sulfur diesel, which has been postponed to Apr. 1, 2021. In contrast, India implemented Bharat Stage (BS) VI specifications (10 ppm sulfur max) for gasoline and high speed diesel (HSD) nationwide since Apr. 1, 2020.
In 2021, two countries of Indonesia and Vietnam also failed to meet their January 2021 sulfur reduction deadlines likely due to the lockdowns which prevented or delayed the movement of equipment and manpower required to carry out refinery upgrading works. With oil demand severely dented by the pandemic, governments and refiners are more likely to focus onto economic recovery and put fuel quality improvements and refinery upgrading projects on hold due to additional cost for businesses and consumers. Overall, developing countries such as Bangladesh, Cambodia and Laos continue to trail behind rapidly developing and developed nations due to challenges in political and economic landscape, poor knowledge on fuel quality and prioritizing supply security over fuel quality. However, as air pollution worsens, the governments in the region are increasingly aware of the importance of fuel quality, and investments are gradually put in place to supply cleaner fuels.
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 time line 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.
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 (see table below). For diesel, new biodiesel blending levels beyond B7 are being planned or are in the process of being phased in by oil palm-producing countries such as B10 and B20 in Thailand and B20 in Malaysia, while Indonesia currently requires biodiesel to account for 30% 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.
Top 10 Asia Pacific Gasoline Markets and their Options to Enhance Octane
|Rank No.||Country||Current Octane Enhancement Options
||Future Octane Enhancement Options
|1||China||MTBE, ethanol, methanol
||MTBE, ethanol, methanol
|4||Indonesia||HOMC*||HOMC*, ethanol, MTBE|
|7||South Korea||MTBE||MTBE, ethanol or ETBE|
|8||Taiwan||MTBE, ethanol||MTBE, ethanol
Note: *HOMC – high octane mogas component consisting of mainly reformates.
Source: Stratas Advisors, January 2021
The full report updates a previous report (see Insights, Feb. 18, 2019), and summarizes changes to gasoline, diesel and biofuels specifications from 2020 to January 2021 in the Asia Pacific region. An outlook for planned changes in fuel specifications beyond January 2021 is included as well.