Exports of IMO-compliant very low-sulphur fuel oil (VLSFO) from Kuwait's recently-opened 615,000 b/d al-Zour refinery will be higher than previous estimates of 5.5mn-6mn t/yr.
State-owned KPC's al-Zour will produce between 11-12mn t/yr of VLSFO at full capacity, of which 7mn t/yr will be exported, according to the company's senior market analyst Salah al-Awadhi.
"Based on our models and calculations for the local demand for power generation, we anticipate that around 7mn t of VLSFO will be available for exports to the bunker market," al-Awadhi said during S&P Global Commodity Insights FUJCON 2023, held in Fujairah, UAE.
Kuwait already produces nearly 14mn t/yr of low-sulphur fuel oil, with demand from power and water utilities changing in summer and winter months. More than 45pc of al-Zour's production will consist of 0.5pc sulphur fuel oil with 380cst viscosity, which is superior to low-viscosity blended material, according to al-Awadhi.
Market participants expect rising VLSFO output to saturate bunker markets in east-of-Suez marine fuel hubs, changing fuel oil flows and putting pressure on premiums.
At full capacity Al-Zour will produce 3mn t/yr of petrochemical grade naphtha, nearly 4.5mn t/yr of kerosene and 7.5mn t/yr of ultra low-sulphur diesel, al-Awadhi said.
KPC started operations at a second 205,000 b/d phase earlier in March. The first phase came online in November so the refinery's nameplate capacity is now 410,000 b/d, although actual throughput is likely to stay well below that as operations at the second phase gradually ramp up. A third and final stage, bringing the refinery to full capacity, will be completed by the end of 2023.
Once fully operational, Al-Zour will have expanded Kuwait's refining capacity to 1.415mn b/d from around 800,000 b/d. Al-Zour has been designed to process mostly heavy crudes, including from the Lower Fars project in northeast Kuwait.
