The vacuum gas oil (VGO) market is seeing steady growth, driven by the increasing global demand for gasoline, diesel, and other refined petroleum products. VGO, a critical feedstock for fluid catalytic cracking (FCC) units in refineries, is essential for improving the yield of high-value fuels.
The demand for fossil fuels across various sectors, along with rising investments in research and development, is expected to positively influence the market. The growing marine industry, in particular, is set to increase the need for VGO as bunker fuel for deep-sea cargo ships and other vessels.
However, strict global regulations on VGO composition and emissions remain a key challenge for the market. The International Maritime Organization (IMO) has enforced stringent guidelines on the sulfur content in VGOs used as marine fuels, further complicating market dynamics.
VGO is mainly used as an intermediate feedstock to enhance the production of gasoline and diesel at refineries. It is produced through vacuum distillation, employing processes like hydrogenation and cracking. VGO is often referred to as “cat feed” because it is used to create gasoil, gasoline, and other by-products.
AI technology is revolutionizing the VGO market by optimizing refining processes and improving yield predictions. Machine learning algorithms and advanced analytics allow refineries to monitor real-time data, enabling better control over the catalytic cracking process. This reduces energy consumption and increases the production of high-value products like gasoline and diesel from VGO. AI is also key to predictive maintenance, minimizing downtime and ensuring smoother refinery operations.
Moreover, AI is being used to analyze global market trends, price fluctuations, and supply-demand dynamics. This predictive intelligence helps VGO producers and traders optimize supply chains, manage inventories, and respond to geopolitical or environmental disruptions. Enhanced forecasting capabilities reduce risks, cut costs, and help companies maintain steady profits in a volatile market.
In February 2024, Honeywell UOP announced the integration of its AI-powered Connected Plant software into several Asian refineries processing VGO. This technology uses AI to improve process efficiency, reduce emissions, and optimize product output by analyzing and learning from refinery data in real-time. This development underscores the growing adoption of AI and its transformative impact on refining operations and environmental performance in the VGO sector.
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