China Issues New VLSFO Marine Fuel Export Quotas

By Chen Aizhu (Reuters) – China has issued 5 million tonnes of clean marine fuel export quotas in the first release for 2021, to five companies including a private refiner, according to two trading sources with knowledge of the matter.

The quotas for the very low sulfur fuel oil (VLSFO) were granted to state-run Sinopec, CNPC, CNOOC, Sinochem and privately controlled Zhejiang Petrochemical Corp.

The Ministry of Commerce, which is in charge of issuing the quotas, did not immediately respond to Reuters’ request for comment.

Among the recipients, dominant state refiners Sinopec and CNPC won a combined total of nearly 3.9 million tonnes of quotas, or nearly 80% of the total.

Private refiner ZPC, based in China’s bunker fuel hub Zhoushan on the east coast, said earlier it won 390,000 tonnes of quotas.

China issued a total of 10 million tonnes of VLSFO quotas for 2020 to the same group of companies, in its first such exports following a global shift to cleaner ship fuel with sulfur content capped at 0.5% in effect since the start of this year.

Exports of the fuel totaled 13 million tonnes in the first 11 months of this year, according to data from the Chinese customs, but that volume included some imports of VLSFO for re-export.

Beijing-based state oil traders said companies underutilised 2020 quotas because refiners were sometimes more motivated to produce diesel at the expense of the clean marine fuel.

Refiners also maintained imports of cheaper supplies from sources like Singapore and the Middle East for bunker sales to ships calling at Chinese ports, the traders said.

(Reporting by Chen Aizhu; additional reporting by Min Zhang in Beijing; Editing by Kim Coghill and Sam Holmes)

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