Dubai — The bunkering hub of Fujairah on the eastern coast of the UAE exported a record volume of marine fuels and other heavy distillates in September, according to cargo tracking data from Kpler.
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Exports rose to 467,000 b/d of heavy distillates last month, the highest since Kpler began following the data three years ago, the company told S&P Global Platts. Shipments were up from 145,000 b/d in September 2018 and 256,000 b/d in August 2019.
New shipping rules taking effect in January require shippers to use fuel with no more than 0.5% of sulfur, compared to the 3.5% content currently allowed.
Fujairah is trying to compete with other bunkering and oil storage hubs like Singapore, the world's biggest, and Amsterdam-Rotterdam-Antwerp, the huge oil refining and distillate storage complex spanning the Netherlands and Belgium. Uniper, which owns one of the refineries at Fujairah, sold 152,000 mt of low sulfur fuel oil in May, at the time the largest in history, for shipment to Singapore.
"We are shipping some product out of Fujairah into Singapore in preparation of IMO 2020," said Chris Wood, managing director of Uniper Energy DMCC, which operates one of the two refineries at Fujairah. "Demand for lower sulfur fuel at the moment is in Singapore. It's supply-chain driven demand by all the people who need to be supplying customers."
Middle distillate exports out of Fujairah rose to 129,000 b/d in September from 79,700 b/d a year earlier and 101,000 b/d in August 2019, according to the Kpler data. Light distillate exports fell to 101,000 b/d from 197,000 b/d in September 2018 and 141,000 b/d in August 2019.
Stockpiles of heavy distillates in Fujairah have been climbing as producers get ready for the shift in fuel rules. As of September 30, heavy distillate stockpiles were 11.362 million barrels, up from 10.555 million barrels on August 26, according to Fujairah data compiled by Platts.
The heavy distillates include fuel oil used for marine bunkers and power generation.
Over the same period, middle distillate inventories were little changed at 2.160 million inventories vs 2.1 million barrels and light distillates were 6.588 million barrels vs 6.497 million barrels.
Middle distillates include gasoil, diesel, marine bunker gasoil, jet fuel and kerosene, while light distillates include gasoline, gasoline blending components such as reformate naphtha and other light petrochemical feedstocks and condensates that are stored in white product tanks and are of an API of 45 degrees and above.
S&P Global Platts is the official publisher of the inventory data published weekly. Stocks as of last Monday rose to an eight-week high, with heavy residue products up almost 11% to 12.58 million barrels. With implementation of IMO 2020 guidelines drawing closer, there was an increase in the volume of high sulfur fuel oil on offer, as traders put cargoes on the market looking to reduce stockpiles of high sulfur fuel oil, Platts reported at the time.
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