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Global refiners raise cleaner shipping fuel output

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Dry Bulk,


According to a report by Reuters, global oil refiners have upgraded processing units and adjusted operations to raise output of low sulfur residual fuels and marine gasoil (MGO) to prepare for stricter shipping fuel standards that kicked in on 1 January 2020.

The new International Maritime Organization (IMO) rules prohibit ships from using fuels containing more than 0.5% sulfur, compared with 3.5% through the end of December 2019, unless they are equipped with exhaust-cleaning ‘scrubbers’.

The shipping industry consumes around 4 million barrels per day (bpd) of marine bunker fuels, and the rule changes will impact more than 50 000 merchant ships globally, opening a new market for fuel producers.

Below is a summary of how major refiners have prepared.

China

Chinese marine fuel suppliers have signed up short-term deals to buy very low sulfur fuel oil (VLSFO) from companies such as oil major Shell, Germany’s Uniper and US commodities trader Freepoint.

While China’s state refiners have pledged to produce a combined 14 million t of the fuel for 2020 that complies with the tighter rules set by the IMO, Beijing has not yet rolled out anticipated tax breaks that will encourage refiners such as Sinopec and PetroChina to ramp up domestic output of VLSFO.

North Asia

SK Chemicals has started tests on blending its biodiesel with petroleum-based fuels to create low sulfur marine oil. At SK Energy’s largest refinery in South Korea, engineers are rushing 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 desulfurisation (VRDS) unit that can produce 40 000 bpd of LSFO due online in March or April of 2020. Japan’s Idemitsu Kosan Co is increasing production of LSFO and is also blending to produce IMO 2020 compliant bunker fuel. Hyundai Oilbank has said it will sell VLSFO from November 2020.

Singapore/Southeast Asia

Sales of low sulfur marine fuel in the Singapore bunkering hub rose to an all time high of 2.076 million t in November 2019, more than double the previous record, government data showed.

Shell loaded its first LSFO cargo from its Pulau Bukom refinery in September 2019, and Singapore Refining Company (SRC) supplied its first VLSFO cargo in October 2019.

Chevron, which partly owns SRC, said its VLSFO and MGO supply capacity in Asia could double in the next 1 - 2 years. Indonesia’s Pertamina said in December 2019 it would soon send its first marine fuel shipment from its Plaju refinery to its Balikpapan supply point.

Vitol is building a 30 000 bpd crude distillation unit (CDU) in Malaysia to supply LSFO starting in May 2020, and IRPC Pcl said it will produce 52 000 t of VLSFO in November 2020.Indian Oil Corporation Ltd has started supplying IMO-compliant fuel in India.

Middle East

Uniper Energy DMCC operates two CDUs in Fujairah that annually produce 3.6 million t of VLSFO, including 0.1% sulfur fuel used in regional Emission Control Areas. Brooge Petroleum and Gas Investment Co said it plans a 250 000-bpd refinery in Fujairah to produce low sulfur fuel.

Europe

Marine fuel supplier Peninsula Petroleum plans to double VLSFO deliveries to 600 000 t by the end of 2020 in Europe and the Americas. Gunvor Group will overhaul its refinery in Rotterdam in March to produce LSFO.

United States

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

Read the article online at: https://www.drybulkmagazine.com/shipping/02012020/global-refiners-raise-cleaner-shipping-fuel-output/

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