SINGAPORE (Reuters) - Royal Dutch Shell (RDSa.L) has loaded the first cargo of low-sulphur fuel oil (LSFO) from its Pulau Bukom refining site in Singapore, it said on Thursday.
Demand for stable low-sulphur marine fuel supplies is rising as the shipping sector prepares for the International Maritime Organization’s (IMO) lowering of the cap on sulphur in marine fuels to 0.5% from 3.5% beginning in January 2020.
This is the first time Shell has made LSFO from its own upstream crude, the company said in a statement.
The cargo will be blended to a finished product, which Shell will supply to bunker customers, enabling its customers to be prepared for the implementation of the IMO 2020 mandate, Shell said.
Shell said it has developed fuel product offers including very low-sulphur fuel oil (VLSFO) supply in selected bunkering ports, high-sulphur fuel oil (HSFO) supply for ships with on-board scrubbers and liquefied natural gas (LNG).
Shippers will need to switch to lower sulphur fuels such as LSFO or marine gasoil (MGO) or install scrubbers to clean the emissions of higher sulphur fuels.
VLSFO has emerged as an economically attractive option, despite expectations of higher demand for marine gasoil.
Refineries around Asia such as Japan’s Cosmo Oil, Taiwan’s Formosa Petrochemical (6505.TW) and South Korean refineries have started producing and selling VLSFO grades.
Reporting by Jessica Jaganathan; editing by Christian Schmollinger