The BP and Sinopec marine fuel bunkering joint venture will start deliveries of high sulfur and low sulfur fuel oils to Fujairah next month, a source close to the matter told S&P Global Platts.
The 50:50 venture, BP Sinopec Marine Fuels Pte., was started five years ago and focused on Asia in the early years, and now has rented storage space for the fuels at the UAE port, the source said. BP and Sinopec declined to comment.
BP and Sinopec had said when the venture was announced in May 2015 that they plan to serve ports in Singapore, Fujairah, Antwerp, Rotterdam and Amsterdam, and China’s Tianjin, Qingdao, Shanghai, Ningbo and Shenzhen.
Sinopec started producing LSFO for bonded bunkering in January with a target production capacity of 10 million mt in 2020.
Production of LSFO has gathered pace since the Chinese government introduced a rebate of Yuan 1,218/mt ($174.24/mt) consumption tax and 13% VAT on domestically produced fuel oil, effective Feb. 1.
Over January-May, China’s fuel oil exports totaled 5.2 million mt, up 29.8% year on year, latest data from the General Administration of Customs showed.
Sinopec is the world’s largest refiner by capacity and accounts for nearly 40% of China’s total crude throughput.
Fujairah produces its own fuel oils, with three refineries located at or near the port. VTTI’s refinery has a capacity of 82,000 b/d, Uniper Energy has two 40,000 b/d distillation columns, and Ecomar Energy Solutions has a 15,000 b/d plant producing naphtha, kerosene, gasoil and residual fuel.
Fujairah fuel oil prices won’t be under pressure from the additional supplies, the source said, noting that the market recently has been reacting to crude oil prices. Delivered bunker fuel for marine fuel maximum 0.5% sulfur in Fujairah was assessed by Platts at $325/mt on July 8, up from $322/mt a week earlier.