Indian ports are running low of marine fuel compatible with the new cap on sulphur emissions.
"Refiners did not expect such a high demand. Production is approximately at 80,000-90,000 t/month, but demand is above 150,000 t/month", a trader said. Other traders put production figures higher.
The lack of available 0.5pc fuel oil, which is compatible with the International Maritime Organisation (IMO) rules, threaten to disrupt coastal shipping on India's east coast unless vessels use marine gasoil (MGO) or high-sulphur fuel oil (HSFO). The latter can now only be used by vessels with exhaust scrubbers.
Indian state-owned HPCL started production of as much as 120,000 t/yr (2,000 b/d) of IMO-compliant marine fuel oil at its 167,000 b/d Visakhapatnam refinery on the country's east coast on 3 January. It is unclear how much similar fuel the company produces at its 150,000 b/d Mumbai west coast refinery. State-owned IOC's total compliant marine fuel production capacity stands at around 1mn t/yr, which is roughly the same as India's domestic demand.
IOC's 274,000 b/d Koyali refinery in Gujarat can produce up to 50,000 t/month of 0.5pc fuel oil at full capacity, using low-sulphur North Gujarati crude as a feedstock. Production of compliant fuels at IOC's 150,000 b/d Haldia refinery on India's east coast, where availability is particularly tight, is more challenging as the plant receives crude with high-sulphur content.
Ports on the country's west coast could start receiving steady supplies of IMO-compliant fuels by the end of January, bunker traders told Argus. The port of Mumbai will have 0.5pc fuel oil supplies on 26 January; Kochi will start offering the product on 22 January, market sources said. Delays can still affect these plans.
By Elshan Aliyev
