Petrobras Not Ready to Produce More LSFO

Tritto said demand is still unclear

Major low sulfur fuel oil (LSFO) producer and exporter, Petrobras, Wednesday said at the SIBCON 2014 conference in Singapore that it is not ready to invest in increased production of LSFO to meet higher expected demand following planned new International Maritime Organization (IMO) regulations.

Demand for LSFO is expected by many to increase dramatically once new global IMO rules come into force, which are subject to a review in 2018, will reduce allowable sulfur content in bunkers from 3.5 percent to 0.5 percent by 2020 or 2025.

Marco Antonio Costa Tritto, global bunker business manager and residuals and feedstocks deputy general manager at Brazilian Petrobas, said there was unlikely to be sufficient LSFO production to meet demand from the global shipping fleet by those dates.

"Certainly Petrobras will not have enough LSFO to provide that many ships to comply with IMO regulations by 2020 or 2025," said Tritto.

He added that Petrobras would need to be clearer about the market demand before investing in increased production.

"It seems that the authorities are very keen to implement the sulphur regulation by 2020 or 2025, but producers are still adopting a wait-and-see attitude," continued Tritto.

Tritto pointed out that when the 0.5 percent sulfur cap is enforced, the shipping industry will comply with the regulation through the use of a combination of methods, including the use of scrubbers or LNG, meaning predicting demand is not straightforward.

Oil major BP has said it sees 2020 as feasible for the implementation of the new rules and has urged the IMO to clarify its intentions.