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 kicked in on Jan. 1, said 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.
Chinese marine fuel suppliers have signed up short-term deals to buy very low-sulfur fuel oil (VLSFO) from companies like oil major Shell, Germany’s Uniper and U.S. commodities trader Freepoint.
While China’s state refiners have pledged to produce a combined 14 million tonnes of the fuel for 2020 that complies with the tighter rules set by the International Maritime Organization (IMO), Beijing has not yet rolled out much-anticipated tax breaks that will encourage refiners such as Sinopec and PetroChina to ramp up domestic output of VLSFO.
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 desulphurization (VRDS) unit that can produce 40,000 bpd of LSFO due online in March or April. Japan’s Idemitsu Kosan Co is increasing production of LSFO and is also blending to produce IMO2020 compliant bunker fuel.
Hyundai Oilbank has said it will sell VLSFO from November.
As MRC informed earlier, SK Global Chemical, one of the largest petrochemical manufacturers in South Korea, increased capacity utilization at cracking plant No. 1 with a capacity of 190,000 tonnes of ethylene and 135,000 tonnes of propylene per year in Ulsan (Ulsan, South Korea) to 100% on 1 January. SKGC also operates the No. 2 cracker in Ulsan with a capacity of 690,000 tonnes of ethylene per year.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC