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Lukoil plans to produce up to 480,000 mt/year of 0.5% sulfur bunker fuel

Kiev — Russian oil company Lukoil plans to produce 30,000-40,000 mt/month, or 360,000-480,000 mt/year, of 0.5% sulfur bunker fuel after sulfur emission limits for the shipping industry are cut to that level.

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Global bunker sulfur limit wil drop from 3.5% to 0.5% at the start of 2020, forcing most shipowners to switch from fuel oil to new, more expensive 0.5% sulfur blends.

Lukoil has already developed its new 0.5% sulfur product, which it will produce at its Volgograd refinery, Anna Zhigulina, leading specialist in Lukoil's foreign vessels bunkering department, said at the International Bunker Conference in the Baltic region Wednesday.

The company's figures for its production plans are "very rough" and subject to change as Lukoil learns more about its Russian competitors' plans and likely demand from the shipping industry, Zhigulina said.

As well as 30,000-40,000 mt/month of 0.5% sulfur fuels, Lukoil plans to produce about 50,000 mt/month of ultra low sulfur fuel oil and about 50,000 mt/month of marine gasoil from 2020.

The numbers are for the Russian bunker market only and do not include products and blending components made for export, Zhigulina said.

Lukoil is likely to review its plans in the second half of 2019 once 2020 bunker fuel demand becomes clearer, and the company may increase production at that point, she added.

--Jack Jordan, jack.jordan@spglobal.com
--Edited by E Shailaja Nair, newsdesk@spglobal.com