The EU are beginning to introduce the new environmental standard Euro-6 starting in 2015.
Standard Euro 6 imposes strict limits on the emissions of NOx and particulates. Some car
manufacturers have already announced that this will be the beginning of the end of the "diesel
era" in Europe, because to produce diesel engines that are adapted to the requirements of
the new standards will be more expensive than comparable gasoline engines. The
companies Ford and Toyota have already estimated that the move would reduce sales of
new diesel vehicles, resulting in decline for diesel fuel demand in Europe eventually. As a
result, this could even lead to reduction in existing refining capacity. (Although, European
governments may decide to stimulate demand for diesel engines by offering tax incentives.)
Currently, 50 % of new vehicles sold in the UK are equipped with diesel engines. In Spain
and France, this figure is even higher – more than 70 %. The average number of vehicles with
diesel engines in the European Union now stands at 55 %. In the EU today, only the
registered cars annually consume over 200 million tons of diesel fuel. According to the
specialized consultancy Wood Mackenzie (the global energy, metals and mining research
and consultancy group) at current levels of consumption and due to underinvestment in the
diesel sector, a potential deficit of up to 50 million tons per year is expected to emerge in the
EU within a decade.
At the same time in the United States and Japan, the share of passenger cars with diesel
engines does not exceed 10 %. Such a situation has developed in Europe largely due to tax
incentives for the purchase of diesel cars, which are available in some EU countries.
However, this may change. The diesel engine dominance in Europe's automotive market
could end later this decade due to the higher cost of production associated with the Euro-6
In order to fulfill the environmental requirements of this new standard regarding emissions, a
new generation of clean technology must apply. The proposed ClearRefining technology and
the associated design larger scale plants based on it, will help address these issues.
The Czech Market
The end of 2014 was a time of a sharp drop in oil prices. Accordingly, this is reflected in the
cost of petroleum products, and in particular the cost of diesel fuel. This situation is favorable
to the Project, since it significantly reduced the cost of the GDiesel® Product. The price of
diesel fuel (quoted at Platts-Rotterdam) between September 2014 to December 2014 fell by
33 %, while the wholesale and retail price in the Czech Republic only fell by 10 %. Diesel price
reduction in the wholesale and retail market is constrained by previous purchases, by major
players in the market, at higher prices. In the future, if the price of oil and petroleum products
respectively remain the same or rise (in the wholesale and retail market) the opposite
situation may be observed. In such a reversed scenario, it will be beneficial for the Project to
raise more working capital in order to build raw material stock (e.g. for up to six months).
For the last 10 years diesel has been the alternative fuel to refiners worldwide. Demand did
not always meet the growing supply. According to the pricing agency Platts, swaps of lowsulfur
diesel in northwest Europe during the 1st quarter of 2014 decreased against futures
for the supply of gas-oil with a sulfur content of 0.1 % (Exchange ICE) and amounted to an
additional US$ 17/ton on CIF (cost, insurance, freight) terms at the port of Rotterdam. This is
the minimum level recorded since 2013. Revenues from other sales in the low-sulfur diesel
fuel swaps in 2014 remained low, as refineries ramped up production of fuel to complete the
autumn routine maintenance works, according to the Platts agency. At the same time, in
November 2014 the spot premium (for the last 6 weeks) declined by 48% to an annual
minimum of US$ 10.5/ton. The value was down US$ 28.75/ton compared to the same period
in 2012. The market situation has changed dramatically. Earlier during the period of seasonal
maintenance work at the refineries, the price (for low-sulfur diesel fuel) was about US$ 40
and even US$ 50/ton. Reduced premiums for diesel fuel in the European market contribute
to rising fuel imports, mainly from the US, where refining margins are much higher than in
Europe. According to traders, maintained fuel production in the United States in 2014 at
current levels and commissioning of new refining capacity in the Middle East and China are
the main factors in reducing premiums during 2014.
KIEG and ARC have conducted thorough research of the global potentially reachable market
for the GDiesel® Product.
Key figures in the Global Diesel Market (MM/t/p.a.):
|Country||Oil Processing Capacity||% Diesel||Diesel Volume|
Estimated Market Potential for the GDiesel® Product with
indications of the required number of ton per day/month and the number of plants capable of
satisfying this potential demand:
|Country||Diesel Volume Produced (MM/t/day)||Diesel Volume Produced (MM/t/month)||Number (*) of ClearRefining Units (Euro-6 standard)|
|Total|| || ||7985|
* Note: the number of production plants required to meet the potential Product demand based on production capacity
of 113 ton/day.
Only for the major diesel producer-countries, during the next three years of transition to the
new stricter environmental standards (e.g. Euro-6) some 7985 ClearRefining Processor units
will need to be produced involving investment to the tune of EUR 3.2 bn.