SK Innovation, South Korea’s largest oil refiner, said it would expand production of low-sulfur fuel through its subsidiary SK Trading International (SKTI).
The International Maritime Organization (IMO) has mandated that ships lower the sulfur content in marine fuels from the current 3.5% to 0.5% by 2020.
SKTI has been making low-sulfur fuel in Singapore ever since it leased a large oil tanker there in 2010. With demand for low-sulfur fuel expected to rise in Singapore, blending the oil on a tanker there instead of in South Korea helps reduce logistics costs, the company said.
SKTI is the only Korean company capable of generating low-sulfur fuel onboard a tanker, according to the company. It can produce about one million tons of low-sulfur fuel oil per year.
The company said it plans to double its production of ultra-low-sulfur fuel, containing less than 0.1% sulfur, this year.
“SKTI was able to expand its business by making stricter regulations into a new opportunity and attempting to blend oil on a ship even though it was considered a challenging area in the industry,” according to a company spokesman.
SKTI provides a global trading platform for SK Innovation. For example, it imports crude oil and exports petroleum products for SK Energy and also sources naphtha for SK Global Chemical. Beyond simple importing and exporting, the company has established a branch in Dubai and three overseas subsidiaries in the Americas, Europe and Singapore, to engage in business development, trading and marketing. Based on these global networks, the company effectively manages the entire trading process from selecting the optimal oil type to contracting, shipping, and payment.