London +4420 814 42225
Moscow +7495 543 9194
Kiev +38044 599 2950

Our Clients

Order Informer

Home > News >

Refiners test the waters with exports of IMO 2020-compliant fuel

July 17/2019

MOSCOW (MRC) -- Refineries in Taiwan and South Korea are testing the market for fuels that meet new rules for low-sulfur ship fuel starting next year, exporting some cargoes of very low-sulfur fuel oil (VLSFO) this month, said Hydrocarbonprocessing.

Oil market participants are uncertain what kind of fuel product shipping companies will use to meet the International Maritime Organization's (IMO) 0.5% sulphur standard for ship fuels starting in 2020. The VLSFO shipments demonstrate that this type of fuel is a viable option that refineries could readily market.

The refiners in Taiwan and South Korea have redirected low-sulfur feedstocks, that would normally undergo further refining into gasoline, toward making the VLSFO, with 0.5% or less sulfur content, as a result of recent low profits for gasoline and to test their ability to produce the fuel.

One refining official based in Seoul said their plant primarily runs high-sulfur crude oil so they take the fuel oil produced after initial refining and remove the sulfur through a residue desulphurization process. Instead of passing the feedstock through a residue fluid catalytic cracker (RFCC) to make gasoline, they are selling it as VLSFO.

He declined to be named as he is not authorized to speak to the media. This would "reduce gasoline output while increasing LSFO output so the gasoline market could recover," the official said.

Taiwan's Formosa Petrochemical, South Korea's GS Caltex, S-Oil Corp and Hyundai Oilbank Corp have sold VLSFO cargoes since June, Reuters has reported. More VLSFO supply could offset demand for marine gasoil (MGO), a more expensive alternative that is being considered by shippers.

Consultancy Energy Aspects said in a report that the "growing VLSFO production provides a threat to diesel demand in 2020 and provides a floor to Asian gasoline markets as more FCCs trim runs to free up VGO to be blended into VLSFO."

Formosa has sold two July cargoes, their first exports of VLSFO in at least a decade, in a pre-marketing effort, company spokesman K.Y. Lin said.

"We'll see how big the market can be," he said, adding that the company also plans to supply VLSFO to tankers calling at its refinery in Mailiao, Taiwan.

GS Caltex sold three VLSFO cargoes for July to September delivery and the company's spokesman said it plans to increase supplies by replacing fuel oil used at their refineries for power generation with liquefied natural gas (LNG).

However, gasoline margins have rebounded this month, reducing the incentive for refiners to switch production.
Author:Anna Larionova
Tags:petroleum products, petrochemistry, Crude oil, petrochemistry.
Category:General News
| More

Leave a comment

MRC help


 All News   News subscribe