Chinese refiner to increase low-sulfur marine fuel oil production, distribution

China Petroleum and Chemical Corp, or Sinopec, the world's largest refiner by volume, is enhancing its low-sulfur marine fuel oil production and distribution capabilities to make rapid strides in the global bunker market, analysts said.

The Chinese company's move comes at a time when the International Maritime Organization has decided to make it mandatory for ships to use fuel oil with a sulfur content of below 0.5 percent, compared with 3.5 percent now, from next year, they said.

"Sinopec has invested heavily to ramp up its desulfurization capacity, and the more regulated shipping emissions standard will enable the company to make the most of its desulfurization capacity on the global stage," said Li Li, energy research director at ICIS China, a consulting company that provides analysis of China's energy market.

"The company (Sinopec) has spearheaded China's clean diesel development in the past few years and also invested heavily on upgrading the hydro refining plant capacity."

Sinopec has said that it would raise the production capability of low-sulfur marine fuel oil to 10 million metric tons by 2020 and 15 million tons by 2023 for greener shipping. The commitment will help cut 600,000 tons of sulfur oxide emissions, equivalent to shutting down over 64 million National IV Standard trucks for a year, it said.

It also plans to further improve its global low-sulfur marine fuel oil sales network and cover major Chinese ports like Zhoushan in Zhejiang province by January 2020, as well as 50 key overseas ports including Singapore.

Three of the company's refineries including Shanghai Refinery, Jinling Refinery and Hainan Refinery, have already started producing low-sulfur marine fuel oil products. The company is also planning to have another seven refineries to produce low-sulfur marine fuel oil in the near future.

Sinopec delivered the first batch of low-sulfur light marine fuel from its Shanghai refinery in March, totaling 6,800 tons following a delivery of low-sulfur heavy marine fuel produced by the firm in January. The Shanghai refinery is also the first in China to produce low-sulfur fuel oil to meet new IMO rules, according to Sinopec.

Liu Zurong, executive director of Sinopec Fuel Oil Sales Co Ltd, said the company, with expertise in global marine fuel business, sees a well-established business network that can supply to 40 major ports abroad.

According to Lyu Dapeng, spokesperson of the company, Sinopec also has the capabilities to scale up the production and supply of low-sulfur marine fuel oil. The production and supply of low-sulfur marine fuel oil is a green initiative that benefits the whole world and requires concerted global action, he said.

Being the largest oil refining company, Sinopec has advanced refining technologies along with the advantage of main refineries close to the consumption market along the coast and the river. It has launched a project focused on research and development of greener, low-sulfur marine fuel oil since 2017.

Shipping emissions have become one of the major sources of air pollution in port cities and coastal areas. One large and medium-sized container ship that sails with a 70 percent load will produce PM2.5 equivalent to the emissions of 210,000 National IV Standard trucks, it said.

As a Category A council member of the International Maritime Organization, China has taken a pioneering step by implementing the new sulfur standards in its coastal areas since January. According to the IMO, the global shipping industry is estimated to consume around 300 million tons of marine fuel oil in 2020.