Project Gets $5 Billion Funding LOI to Produce 0.5% Max Sulfur HFO Bunkers

The project itself will be located in the Middle East, and involves what was described as a "major party" in the region.

Canada-based Genoil Inc. (Genoil) and its consortium partner Beijing Petrochemical Engineering Co Ltd (BPEC) today have announced the receipt of a $5 billion Letter of Intent (LOI) to fund a 500,000 barrel per day (bpd) desulfurisation and upgrading project, which ultimately aims to produce 0.5 percent maximum sulfur HFO bunkers to meet the upcoming global sulfur cap.

If realised, it would mark a first for the bunker industry, as previously the lowest sulfur HFO bunkers that have been readily produced were to meet the now superseded 1.0 percent maximum sulfur Emissions Control Area (ECA) regulations.

Genoil says its technology is able to produce LSFO from refinery residue without the need for blending, and at 75 percent less cost than producing middle distillates, with the resulting bunkers priced "much more competitively than MGO." 

"With Genoil's GHU technology we can take refinery residue and turn it into LSFO meeting 2020 legislation," said Genoil President and Chief Operating Officer Bruce Abbott.

"The shipping industry is experiencing increased environmental regulation, and seismic change within the fuel supply chain. Genoil's ability to provide the industry with compliant products in time to meet 2020 regulations will go a long way to alleviating the pressure on refiners, charterers, ship owners, as well as fuel suppliers in having access to adequate, cost effective products."

The project itself will be located in the Middle East, and involves what was described as a "major party" in the region.

"The goal of the consortium is to develop 3.5 million bpd of desulfurization capacity at a total estimated cost of $35-50 billion. Financing will be subject to a number of conditions and approval of the contract terms by all parties," the companies note.

Another project looking to produce 1 million bpd is also said to be currently under consideration by a second national oil company.

Today's announcement comes at a time when the industry is pressing for a decision on whether the 0.5 percent global sulfur cap will come into force in 2020, or be delayed until 2025 - a decision expected later this year.

Genoil's technology aside, current options for compliance are burning more expensive MGO, using a scrubber to clean emissions to an equivalent level of compliance, use one of the so-called "hybrid" fuels (also known as heavy distillates), or switch to an alternative bunker fuel such as liquefied natural gas (LNG) or methanol.

This is not the first time Genoil has been involved in such a bunker project.

In April 2014 it signed a deal with the now defunct OW Bunker to build a system to produce low-sulfur fuel at the Port of Rotterdam.