Reuters reports that Japanese third-largest refiner, Cosmo Oil, is building stocks of very low sulphur fuel oil (VLSFO) that can be supplied to domestic marine fuel markets from October ahead of IMO 2020 sulphur cap.
Specifically, Cosmo Oil produces VLSFO at its residue desulfurizer (RDS) unit at its Chiba refinery near Tokyo to build stocks.
Cosmo Oil’s President Shunichi Tanaka said on Sunday, ahead of the Asia Pacific Petroleum Conference (APPEC) stated that
We still have some spare capacity at our residue desulfurizer so we can produce more low-sulfur fuel oil to supply to the bunker market.
The company’s decision on selling VLSFO is in line with a new Asian refiner trend where Asian refiners seek to capitalize on IMO demand. As VLSFO production grows, demand for alternative marine gasoil (MGO) may not be as strong as what was initially believed. Instead of running on VLFSO or MGO that contain 0.5% sulphur, vessels can now add sulphur-removing units, or scrubbers, onboard to continue using cheap high-sulfur fuel oil.
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Moreover, this plan will decrease Cosmo Oil’s surplus gasoil production. Following the company’s production, Cosmo Oil is discussing on locking some of its VLSFO supplies as they aspire to change into the new fuel from October.
Concluding, the unit that was processing fuel oil to middle distillates halted operations on August 21 for the revamp.
