UPDATE : 2019.12.13 FRI 09:50
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Refiners brace for IMO 2020 with desulfurization, upgraded facilities

South Korean refiners said Tuesday they're ready to cope with new International Maritime Organization (IMO) regulations on sulfur content in marine fuel with desulfurization and upgraded facilities.

Starting Jan. 1, 2020, the IMO's new rule will go into effect limiting the sulfur cap of marine fuel to 0.5 percent from the current 3.5 percent. To comply with IMO 2020, vessel operators need to either install exhaust gas cleaning systems, also called scrubbers, or use clean fuels such as low-sulfur fuel oil, marine gas oil and liquefied natural gas (LNG).

To take benefits from IMO 2020, local refiners have been beefing up their desulfurization and upgrading facilities to produce more low-sulfur petroleum products.

SK Innovation Co., South Korea's top refiner, has invested 1 trillion won to set up its Vacuum Residue Desulfurization (VRDS) facility in Ulsan, South Korea, that can produce 40,000 barrels of low-sulfur fuel oil a day. SK Innovation's VRDS facility is expected to begin commercial operation in the first quarter of next year.

This undated photo provided by SK Energy Co. shows the construction site of the company's Vacuum Residue Desulfurization (VRDS) facility in Ulsan. (PHOTO NOT FOR SALE) (Yonhap)

GS Caltex Corp., South Korea's No. 2 player, said its low-sulfur oils that have been previously used for plant operation will be replaced by LNG, with the low-sulfur oils to be sold on the market. The company also runs the nation's largest facilities producing light oils, such as gasoline and diesel, by processing high-sulfur heavy oils, with daily production able to reach 274,000 barrels.

S-Oil Corp. last year began the commercial operation of its US$4.2 billion residue upgrading complex (RUC) and olefin downstream complex (ODC) in Ulsan that can produce low-sulfur oils. The company is also revamping its Residue Hydro-Desulfurization (RHDS) unit to expand its capacity to process high-sulfur bunker C oil.

Hyundai Oilbank Co. recently applied for a patent for a production process making very low-sulfur fuel oil at the facilities it's upgrading. The company last year completed its Solvent De-Asphalting (SDA) facility, which can also produce high-value low-sulfur products.

This photo provided by S-Oil Corp. shows the company's residue upgrading complex in Ulsan. (PHOTO NOT FOR SALE) (Yonhap)

Analysts said that increased demand for low-sulfur fuel oils will jack up refiners' earnings from the fourth quarter. Low-sulfur fuel oils are generally 30 to 40 percent more expensive than high-sulfur fuel oils.

"The proportion of high-sulfur fuel oils in the marine fuel market fell to 89 percent this year and is expected to drop below 50 percent from next year," Cho Hyun-ryul, an analyst at Samsung Securities Co., said. "The implementation of IMO 2020 will boost the companies' refining margin." (Yonhap)

Song Na-Ra  edt@koreapost.com

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