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Shipping company Maersk may produce own 0.5% sulfur bunker fuel blend

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Shipping company Maersk may produce own 0.5% sulfur bunker fuel blend

London — Transport and logistics group AP Moller-Maersk may produce its own blend of bunker fuel at Rotterdam to comply with the International Maritime Organization's lower marine fuels sulfur cap in 2020, a spokeswoman told S&P Global Platts Wednesday.

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The IMO's global sulfur limit for bunker fuel is set to drop to 0.5% at the start of 2020 from 3.5%, forcing most shipowners to switch to burning cleaner, more expensive fuels or install scrubber systems to clean their emissions on board.

Most global refiners are expected to produce their own version of a 0.5% sulfur fuel, but little information has emerged so far about the new blends.

Maersk may use a facility announced this week in a joint initiative with Vopak at Rotterdam to produce its own blend of bunker fuel, buying blendstocks from refiners rather than taking a finished bunker fuel, the spokeswoman said.

The company said Monday its facility with Vopak would be able to deliver about 2.3 million mt/year.

"The key is that we can do either or both," the spokeswoman said Wednesday, referring to buying blendstocks or finished product from the refiners.

The tanks at the facility will be "in a totally segregated set of pits" and will be designed to deliver 0.5% sulfur bunker fuels only, she said.

Maersk has previously said it did not intend to install scrubbers on its vessels -- which would allow them to continue burning high sulfur fuel oil after 2020 -- and was thus unlikely to need high sulfur fuel oil to be available from the facility.

Sources expect other shipping companies to follow suit to ensure they obtain consistently compliant fuel, but will have a tough time competing with Maersk's extensive supply chain.

"It's a new kind of thing, the 0.5% market won't be so tight [because others will follow]," a fuel oil trader said. "Maersk will definitely go beyond everyone in terms of logistics etc."

Trading houses will likely be a competitor. But for shipping companies to fully compete they may have to merge with a trading house to have access to the full supply chain.

--Jack Jordan,

--Eleni Pittalis,

--Edited by Jeremy Lovell,