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Korea: SK Innovation to enter LSFO bunker market

11 Jul 2018

Seoul-based petroleum refining firm SK Innovation, the parent company of SK Trading International, is planning to complete construction of a 1 trillion won (USD $896.8 million) Vacuum Residue Desulfurisation (VRD) Unit in Ulsan by July 2020 to produce low sulphur fuel oil (LSFO), according to The Korean Herald.

The development is due to preparations for the introduction of the 0.5% sulphur cap for marine fuel by 2020.

The VRD unit, the largest capacity among refiners in South Korea, will be able to produce 38,000 barrels of low sulphur fuel per day.

“Due to the new unit we will be able to react more flexibly to changes in the future low sulphur oil market, which is widely expected to see an increase in price due to a global supply shortage,” said SK Innovation. 

SK Innovation, meanwhile, says it expects to sell more LSFO material to the marine fuels market at Singapore in order to made up for reduced margins of LSFO production at Ulsan.

SK Trading International has been blending 0.1% sulphur LSFO product at Singapore since 2015 using an oil tanker there, the company said.

It is targeting to sell 100,000 metric tonnes (mt) of LSFO at Singapore this year, an 85% increase from sales volume of 54,000 mt in 2017; it estimates the Singapore LSFO market to grow 30% to 190,000 mt in 2018 from 140,000 mt last year. 

Published: 11 July 2018

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