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SINGAPORE — Chinese refiners are expected to produce more than 15 million tonnes of very low sulfur fuel oil (VLSFO) this year, a record level, as the country allows greater competition in the marine fuel sector, an industry executive said on Wednesday.
Local authorities on China’s east coast have rushed to grant new licenses for supplying VLSFO, which has a maximum sulfur content of 0.5%, to capitalize on the International Maritime Organization’s tighter emission rules that came into force in 2020.
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Qin Zhigang, a vice president of China Marine Bunker (PetroChina) Co Ltd, or Chimbusco, told a live-streamed oil seminar in east China’s Zhoushan that China now has 30 licensed dealers of bonded marine fuel, double the number it had in 2020.
Output of VLSFO during the first seven months of this year soared 32% on the year to 8.79 million tonnes, and is expected to breach the 15 million tonne level in the full year, Qin said.
He did not give a comparative figure for VLSFO production, but based on analysts’ estimates, the projected 2022 output will represent an increase of 30% from 2021.
This bucked the trend of overall Chinese refinery production, which has shrunk 6.3% over the same period as the country’s coronavirus policy crimped fuel demand.
China aims to grow its bunker hubs to rival Singapore, the world’s largest bunker center.
Between January and July its bonded bunker sales reached 11.84 million tonnes, down 1.1% on the year, weighed by the country’s slowing merchandise trade and as COVID-19 restrictions curbed port operations.
Singapore’s total bunker sales fell much more heavily in the same period, by 7.8% to 27.04 million tonnes. (Reporting by Chen Aizhu and Muyu Xu; Editing by Jan Harvey)
financialpost.com