MARINEGlobal Trends

Global Sulphur Cap

Diverging Requirements

Shipping Industry Pressures

2-Stroke Low Sulphur Concerns

A time of change, challenge and opportunity

• Geopolitical, economic and trade policy risks

• Digitalization and e-commerce

• Excessive new capacity

• Consolidation and restructuring

• Global Sulphur cap

• Greenhouse gas reduction

MARINE

Global MarineIndustry Trends

80%Global trade carried by sea

4%Fastest growth in five years

From Review of Maritime Transportation 2018, by UNCTAD, ©2018 United Nations. Reprinted with the permission of the United Nations.

MARINE

Countdown to Global Sulphur Cap

Industry is focused on January 1, 2020 implementation date for global 0.50% sulfur cap

M A R I N E

IMO Sulphur Emissions Regulations Over Time

0.1% S (LSF)1.5% S (LSF) 1.0% S (LSF)

2008 2010 2015

ECA

4.5% S (HFO) 3.5% S (HFO)

2012

Start

Ocean 0.5% S

March 2020

IMO HSFO

Carriage ban*

* For ships not fitted with scrubbers

2020

M A R I N E

Solutions will Impact Refiners and Shippers

Low Sulphur Fuels

Alternative Fuels

Scrubbers

New low S fuels will be predominant solution initially

M A R I N E

Marine Fuel Production

Post 2020 – More Complex!More Paraffinic

More Aromatic

Blend stability /compatibility?

Diverging Fuel and Lubricant Requirements

* Under development as new fuels become available

LUBE ADDITIVESolution

FUEL ADDITIVESolution

FUEL issue

LUBE Issue

The lubricant additive system is a critical enabler for the continuous development and innovation required

to meet the IMO 2020 Sulphur Cap challenges

TPEO 10-15BN

MDCL <=40BN

MDCL 70-140BN

TPEO 30-55BN

Deposit ControlLacquering ControlAsphaltene DispersionAcid

Neutralisation

Lacquering WaxAsphaltene

ManagementWax

Poor

combustionWear

Lacquering

Control*

Asphaltene

Management

Pour Point

Depressants

Prevent

On-board

Wax

Pour Point

Depressants

Combustion

Improvers

Lubricity

Additives

Distillates

<0.1 – 0.5% S

HFO

Up to 3.5% S

HFO

<0.5% S

Hybrid fuels

0.5% S

FUEL type

* Under development as new fuels become available

M A R I N E

Diverging Fuel and Lubricant Requirements

Marine fuel and lubricant additives will need to evolve

VLSFO

(0.5% S)

M A R I N E

Fuel Stability and CompatibilityIt is anticipated that asphaltene deposition will become more prominent post 2020 – blending aromatic (high sulphur) components with paraffinic (low sulphur) components

2 main aspects to consider:Any fuel blend has to have its own intrinsic stability

Fuels would ideally have a degree of compatibilitywith other fuels

Fuel segregation strongly recommended by CIMAC

Prevention of asphaltenes dropout is challenging.

Infineum additives can play a key supporting role in providing fit for purpose fuels

Industry bodies working to better define specifications.

ISO - PAS document expected soon

M A R I N E

Post 2020 Marine Fuels Will be More WaxyRefiners will utilise various strategies to produce low sulphur marine fuel

Lower sulphur crude -> waxier fuels -> potential for screen and filter blocking

Cold flow additives change morphology of wax as it crystallises:

• Reducing heating requirements

• Preventing blocking of storage tank screens/filters

• Preventing build up of wax in stagnant regions of tanks

Untreated Treated

Treated

Untreated

M A R I N E

2-Stroke Low Sulfur Concerns

LSF expected to be $200-500/tonne more than HFO

Slow steaming easy way to reduce fuel costs

Very high +100 BN oils needed to prevent liner wear

Single lubricant approach for 0.5% and 0.1% S fuels requires careful formulation to retain protection

Post 2020 Sulphur Cap Implementation

Compliance scenarios will continue to evolve

• Some non-compliance still expected - <10%

Ban on carriage of non-compliant fuels in March 2020 to aid implementation, compliance and enforcement

M A R I N E

Fuel price and availability

Cost/ease of installing abatement system

Enforcement and pressure to comply

Latest IMO Greenhouse Gas Actions

Initial strategy: reduce GHG from international shipping by at least 50% by 2050 vs. 2008

MEPC approves actions up to 2023

• January 2019 – mandatory data collection of fuel oil consumption by ships > 5,000 gross tons

• May 2019 – MEPC considers proposals for short-term measures

• 1H 2019 – 4th IMO GHG study initiated

M A R I N E

GHG reduction is the next big challenge for the marine industry

2008

2050

GHG down

50%

M A R I N E

Continuing Pressure on Shipping IndustryAdvanced, field-proven lubricants required to meet future market needs

Pressures on marine rising

• Wider NOx Tier III

• S & CO2

• Particulate matter

• Environmentally acceptable lubes

Base stock changes

• Bright stock replacement

• Asphaltene handling in Grp. II

TPP labelling threshold

Base Stock Challenges –Group I Demise

Group I capacity reduction means less bright stock available

• Used to provide film strength in marine formulations

Continued use of Bright stock

• Cost and availability issues

M A R I N E

Additive thickener solution

• Marine Diesel Cylinder Lubricant tested in 5,000 hour field trial

– Excellent cleanliness and wear at low treat rate

– OEM ‘Letter of no Objection’ issued

• Trunk Piston Engine Oil thickeners under development

M A R I N E

Group I Demise –Use of Group II

Group II use in trunk piston engine oils (TPEO) is increasing

Asphaltenes can result in deposits on the piston undercrown and the cold parts of the engine

Booster additives improve asphaltene handling and deliver the required level of engine cleanliness

• Proven in field trials

TPEO formulators can benefit from Group II performance

• Oxidation & viscosity control

• Better base number retention

• Improved NOACK stability

M A R I N E

Countdown to Global Sulphur Cap