China to Ban High-sulfur Diesel Used by Ships from November 1


In an effort to clear up its emission, China has decided to ban the use of high-sulfur diesel used by ships from November.

Sales to be ceased:

China has decided to cease the domestic sales of diesel with sulfur content higher than 10 parts per millions (ppm), typically used by tractors and ships. The move, comes just ahead of the winter season when pollution levels are usually high as more coal is used for heating purposes, could prompt oil companies in the country to ship overseas surplus higher-sulfur diesel in the coming months.

Expected move:

A fuel marketing manager with PetroChina said, “Companies may have extra high-sulfur diesel to sell as they replace storage tanks with cleaner fuel”. The official stressed that the refiners had been mostly expecting this move and were ready to produce diesel adhering to the so-called “national five” standard that allows a maximum sulfur content of 10 ppm.

Implementation challenges:

The challenge will be in the execution of the ban, an oil analyst said, which follows a move earlier this year to stop sales of diesel with more than 50 ppm of sulfur and a 10-ppm cap on diesel used by automobiles.

The government’s quality inspectors can only run random checks, and both dealers and users will be tempted to stick to dirtier and cheaper supplies, said Seng-Yick Tee, oil analyst with consultancy SIA Energy.

Enforcing the ban on diesel used by fishing boats is likely to be even more difficult, with most of these small consumers using marine gasoil containing 5000-ppm sulfur, traders said.

Supply of low-sulfur crude oil increases:

To cope with the changing fuel quality, refineries have ramped up imports of lower-sulfur crude oil, a reason why shipments of Russian grades into China soared to a record high in September with a 60 percent year-on-year rise.

China’s National Development & Reform Commission said in a statement on Tuesday that it would crack down on the production and distribution of oil products that do not meet government standards, and increase its supervision of major refiners and rural gas stations.

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Source: Reuters


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