Petrobras not ready to produce more low-sulphur fuel

Brazil’s Petrobras, a major producer and exporter of low-sulphur fuel oil (LFSO), is not ready to invest in producing more of the cleaner fuel to meet potentially higher demand ahead of the IMO sulphur regulation.

Marco Antonio Costa Tritto, global bunker business manager and residuals and feedstocks deputy general manager at Petrobas, also believed that there will not be enough LFSO to cater to the global shipping fleet, in view of the IMO regulation requiring ships to burn fuel with a maximum of 0.5% sulphur content by 2020 or 2025, subject to a review in 2018. By then, the fuel sulphur content limit will be drastically reduced from the current 3.5%.

“Certainly Petrobras will not have enough LSFO to provide that many ships to comply with IMO regulations by 2020 or 2025,” Tritto told Seatrade Global on the sidelines of the SIBCON 2014 conference on Wednesday.

He added that Petrobras is not yet willing to invest in increasing the production of LSFO with the compliant sulphur level when they remain unclear about the market demand.

“Petrobras will continue to export to key global markets and our LSFO products typically have a sulphur content of 0.5% to 0.8%,” he said. “It seems that the authorities are very keen to implement the sulphur regulation by 2020 or 2025, but producers are still adopting a wait-and-see attitude.”

Tritto pointed out that when the 0.5% fuel sulphur limit is enforced, the shipping industry will comply with the regulation through the use of a combination of methods, including the use of scrubbers or LNG.

“The big question is what will be the proportion of global fleet that will use scrubbers and how many of them will use LNG, which is not largely available today,” he said. “One thing for sure is that producers will not want to put in their money now.”

Meanwhile, oil major BP has urged the IMO to confirm the implementation date for the global 0.5% sulphur content limit on bunker fuel, and believed that the 2020 implementation year is feasible.

Posted 15 October 2014

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Asia Correspondent Lee Hong Liang has joined Seatrade as its Asia Correspondent. Based in Singapore, he will provide a significant boost to daily coverage of the Asian shipping markets, as well as bring with him an indepth, specialist knowledge of the bunkering markets. Throughout Hong Liang’s 14-year career as a maritime journalist, he has reported ‘live’ news from conferences, conducted one-on-one interviews with top officials, and the ability to write hard news and feature stories.

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