China’s Sinopec Corp plans to build a fleet of 100 barges over the next three years to supply marine fuel compliant with new global emission standards, said a Chinese shipping executive with direct knowledge of the matter.
In what would be one of the top Asian refiner’s biggest shipping investments, Sinopec hopes the fleet would serve its stated ambition to become a top regional supplier of very low sulfur fuel oil (VLSFO).
Burning VLSFO is one of the options for shipowners when they have to switch to fuel that contains 0.5% sulphur from the current 3.5% in January under a mandate by the International Maritime Organization (IMO).
“To match Sinopec’s goal of supplying 10 million tonnes of IMO compliant fuel next year and 15 million tonnes in 2023, it (Sinopec) must have a fleet of its own,” said the executive based in eastern Chinese port Zhoushan.
The fleet would include new orders of 50 vessels of 8,000 to 10,000 deadweight tonne (DWT) each and chartering another 50 smaller vessels each of 3,000-4,000 DWT, said the official, who declined to be named as he’s not authorized to speak to the press.
The cost of buying the 50 new vessels would be around 4 billion yuan ($571.91 million), said the shipping executive, adding that all the barges will be built in Chinese shipyards.
Shihua Nanjing Tanker Co, a joint venture between Sinopec Fuel Oil Company and state-run shipping firm Nanjing Tanker Co, would operate the fleet. It currently operates 10 barges.
Sinopec Corp declined to comment.
Owning vessels will provide security of operations while chartering part of the fleet gives the company flexibility to cope with market fluctuations, said a second official, a Sinopec executive familiar with the firm’s marine fuel strategy.
Sinopec has designated 10 subsidiary refineries along coastal China to produce VLSFO, including Zhenhai Refining and Chemical Co, Jinling Petrochemical Corp and Hainan refinery, most of which are equipped with desulphurisation units ready to produce the new fuel.
The larger barges will ship fuels from these refineries to three trans-shipment hubs in Shandong province, Zhoushan port on the east coast and Guangzhou in the south, where Sinopec has leased storage, said the executive.
Shihua Nanjing Tanker Co is headquartered in Zhoushan, where Sinopec has moved its global fuel oil center last year. With proximity to one of the world’s busiest shipping lanes, Zhoushan hopes to become a top regional marine bunker hub.