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Oil refiners gear up to supply marine fuel compliant with IMO2020

GLOBAL oil refiners have revamped processing units and adjusted operations to boost output of low sulphur fuels and marine gasoil (MGO) to meet the International Maritime Organisation's (IMO) new rule that caps the sulphur content level in marine fuels to 0

06 December 2019 - 19:00

GLOBAL oil refiners have revamped processing units and adjusted operations to boost output of low sulphur fuels and marine gasoil (MGO) to meet the International Maritime Organisation's (IMO) new rule that caps the sulphur content level in marine fuels to 0.5 per cent from January 1.

The shipping industry consumes four million barrels per day (bpd) of marine bunker fuels, and the rule change will impact 50,000 merchant ships globally, opening a significant new market for fuel producers, reported Reuters.



The world's largest refiner, Sinopec Corp, has commenced very low sulphur fuel oil (VLSFO) output at 10 refineries in China. The company plans pump out a total of 10 million tonnes a year (equivalent to 180,000 bpd) by 2020, and build a fleet of 100 barges over the next three years to supply cleaner fuels to ships.



PetroChina has targeted four million tonnes of VLSFO in 2020, while Total plans to supply marine fuel through a joint venture with China's Zhejiang Energy.



China Marine Bunker (Chimbusco) secured four million tonnes of VLSFO for this quarter, plus the first two quarters of 2020, and has started to supply all major ports in China from bonded storage.



Over in North Asia, engineers at SK Energy's largest refinery in South Korea are scrambling to complete a new processing unit ahead of schedule.



The unit of SK Innovation started supplying MGO from October and is building a vacuum residue desulphurisation (VRDS) unit that can produce 40,000 bpd of low sulphur fuel oil (LSFO) from next March or April. Japan's second-biggest refiner Idemitsu Kosan Co, is raising capacity for LSFO, however, it is also relying on blending to produce IMO2020 compliant bunker fuel.



Hyundai Oilbank said earlier that it will sell very low sulphur fuel oil (VLSFO) from November.



In Japan, Fuji Oil Co Ltd, Cosmo Energy Holdings Co Ltd and Idemitsu Kosan Co Ltd started shipping IMO-compliant fuels in October.



As for Singapore and Southeast Asia, Royal Dutch Shell loaded its first LSFO cargo from its Pulau Bukom refinery in September, and Singapore Refining Company (SRC), a joint venture of Chevron Corp and Singapore Petroleum Co, supplied its first VLSFO cargo in October.



Chevron said its VLSFO and marine gasoil (MGO) supply capacity in Asia could double in the next one to two years.



Vitol is building a 30,000 bpd crude processing unit in Malaysia to supply LSFO starting in May 2020; and IRPC said it will produce 52,000 tonnes of VLSFO in November, making it Thailand's first refinery to produce IMO-compliant fuel.



Indian Oil Corporation Ltd has started supplying IMO-compliant fuel in India.



In the Middle East, Uniper Energy DMCC operates two crude processing units in Fujairah that annually produce 3.6 million tonnes of VLSFO, including 0.1 per cent sulphur fuel used in regional emission control areas (ECAs).



Brooge Petroleum and Gas Investment Co said it plans a 250,000-bpd refinery in Fujairah to produce low sulphur fuel, while Qatar Petroleum said in October it has started supplying VLSFO at its ports.



In Europe, marine fuel supplier Peninsula Petroleum plans to double VLSFO deliveries to 600,000 tonnes by year-end in Europe and the Americas. Furthermore, Gunvor Group will overhaul its refinery in Rotterdam in March to produce LSFO.



In the US, most US Gulf Coast refiners are able to process heavy crudes used to make IMO-compliant marine fuels, and have invested heavily this year in refurbishing distillation units and cokers to process cheaper, heavy grades.



Motiva Enterprises overhauled its Port Arthur, Texas refinery this year so it can produce compliant fuels. This month, PBF Energy restarted a coker at its Chalmette, Louisiana refinery that been idle for nine years.


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