Vitol plans Malaysian refinery to meet IMO demand

Trading firm Vitol has started construction of a small refinery in Malaysia that will be geared to producing marine fuel compliant with the International Maritime Organisation (IMO) 0.5pc sulphur cap.

Work started last month on the refinery, which will have a 35,000 b/d crude distillation unit (CDU) and is expected to be ready by the third quarter of 2020.

The refinery will be located at the Tanjung Bin oil products storage terminal, which is part-owned by Vitol. The terminal at the southern Malaysian port of Tanjung Pelepas, located within a few kilometres of the major regional bunkering hub of Singapore, has around 1.15mn m³ (7.25mn bl) of storage capacity.

Vitol has yet to decide which crude quality it will feed into the CDU.

Vitol's refinery is the latest downstream project targeted at meeting expected growth in demand for IMO-complaint fuel.

UAE storage firm BPGIC this month said it will partner with Nigeria-based energy and infrastructure firm Sahara Energy to build a 250,000 b/d refinery at the UAE port of Fujairah that will also be geared towards production of IMO-complaint marine fuels.

Fujairah is the site of Vitol's 82,000 b/d refinery, which in February announced its readiness to offer IMO-complaint low-sulphur fuel oil (LSFO).

And German firm Uniper's simple crude processing facility in Fujairah has been able to produce LSFO with sulphur content as low as 0.1pc since the start of 2017.

The IMO's 0.5pc sulphur cap will come into force on 1 January 2020.