While oil major rival, BP, was detailing plans for its 2020 VLSFO availability, Shell is reported in Reuters as planning to re-open a mothballed refinery in Germany to produce its own VLSFO.
According to Reuters, Royal Dutch Shell has struck a deal with Dutch tank terminal firm HES International to partially restart a German oil refinery closed since 2011 in response to new restrictions on marine fuels.
HES Wilhelmshaven Tank Terminal is in the process of reinstalling the vacuum distillation unit (VDU) at Wilhelmshaven to produce low-sulphur bunker fuels ahead of the implementation of the IMO rules, a spokeswoman for the company said. HES said it had “reached a tolling agreement with a customer,” but declined to comment on the parties involved. However, two trading sources with knowledge of the matter told Reuters the customer in question is Shell. The agreement is akin to a processing deal, whereby Shell brings in the feedstock and handles the end product, one of the sources said.
The IMO sulphur restrictions will lead high-sulphur fuel oil demand to fall 60 percent to 1.4 million bpd next year, while marine gasoil demand will more than double to 2 million bpd, the International Energy Agency forecast this week.