Chimbusco secures four million tonnes of very low-sulphur fuel

ZHOUSHAN, China (Reuters) - China Marine Bunker, known as Chimbusco, says it has secured at least 4 million tonnes of very low-sulphur fuel oil (VLSFO) for the next three quarters and has already started to supply all major Chinese ports from bonded storage.

Demand for VLSFO is set to rise as International Maritime Organisation (IMO) rules will ban ships from using fuel oil with a sulphur content above 0.5% from Jan. 1, 2020 compared with 3.5% now unless they are equipped with exhaust scrubbers.

Chimbusco, part of state-run oil and gas firm PetroChina, already has more than 10,000 tonnes of VLSFO into its bonded storage in China, the company's general manager, Sun Hougang, said at an industry conference in Zhoushan.

The 4 million tonnes of supply has been secured from Chinese and international firms for the fourth quarter of 2019 and the first two quarters of 2020, Sun later told Reuters.

VLSFO produced by PetroChina will mostly be sold via Chimbusco after IMO 2020, said Sun, who sees demand for VLSFO picking up from mid-late November ahead of the Jan. 1 deadline.

PetroChina International earlier on Friday announced it was setting up a bunker fuel division in Zhoushan, a bonded free trade zone in Zhejiang province just south of Shanghai.

Eight of PetroChina's refineries and 10 of rival Sinopec's are capable of producing VLSFO, Sun said, noting that seven plants had far carried out trial output, producing 37,000 tonnes.

Bunker fuel suppliers' financing needs were set to rise by 20-30% after IMO 2020 due to higher costs, Sun added.

In this regard, Chinese firms have been lobbying the government to introduce tax rebates and an export quota system to boost output of VLSFO.

It is just a matter of time before a waiver of the 1,218 yuan ($172.01) per tonne consumption tax and rebate on the 13% value-added tax on fuel oil is released for VLSFO, Sun said.

(Reporting by Muyu Xu and Tom Daly; Editing by Mark Potter and Jane Merriman)