MOSCOW (MRC) -- 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 kick in on Jan. 1, as per Hydrocarbonprocessing.
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, unless they are equipped with exhaust-cleaning “scrubbers”. The shipping industry consumes about 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 significant new market for fuel producers.
The world’s largest refiner, Sinopec Corp has started very low-sulfur fuel oil (VLSFO) output at 10 refineries in China. The company plans total VLSFO capacity of 10 million tonnes a year (about 180,000 bpd) by 2020 and build a fleet of 100 barges over the next three years to supply cleaner fuels to ships.
PetroChina (0857.HK) has targeted 4 million tonnes of VLSFO in 2020, while Total (TOTF.PA) plans to supply marine fuel in a joint venture with China’s Zhejiang Energy.
China Marine Bunker, known as Chimbusco, secured at least 4 million tonnes of VLSFO for the fourth quarter of 2019 and the first two quarters of 2020, and has started to supply all major Chinese ports from bonded storage.
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 desulphurization (VRDS) unit that can produce 40,000 bpd of low sulfur fuel oil due online in March or April.
Japan’s second-biggest refiner Idemitsu Kosan Co is increasing capacity for LSFO, but is also relying on blending to produce IMO2020 compliant bunker fuel. In Japan, Fuji Oil Co Ltd (5017.T), Cosmo Energy Holdings Co Ltd (5021.T) and Idemitsu Kosan Co Ltd (5019.T) began shipping IMO-compliant fuels in October.
As MRC wrote earlier, in mid-September 2019, SIBUR Holding (SIBUR) and China Petroleum & Chemical Corporation (Sinopec) signed a framework cooperation agreement to produce SEBS (styrene, ethylene and butylene-based block copolymers). SEBS is a pelletised modifier for thermoplastics used to impart elasticity to plastic materials or as a primary polymer to produce elastic components. SEBS boasts excellent durability and is leveraged across a variety of industries such as plastics and bitumen modification, adhesives, modification compounds, and toys. Under the agreement, SIBUR and Sinopec will establish a 50/50 joint venture (JV) in Russia to produce at least 20 ktpa of SEBS.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polyprolypele (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.
MRC