South Korea's Samsung Total to export diesel from 2014
South Korea's Samsung Total Petrochemical Co Ltd will export low sulphur diesel for the first time from 2014, sources said, adding to a growing pool of the more environment-friendly product in Asia where demand has failed to keep up with supply, Reuters reports.
Refiners in Asia are turning high sulphur gasoil into the environment-friendly fuel quicker than customers can use it, causing a glut of the more expensive low sulphur diesel in Asia.
Nearly all North Asian refiners currently produce mostly 10 ppm sulphur diesel - a grade used in Japan and South Korea - while the biggest Asian importers like Vietnam and Indonesia are still on the cheaper high sulphur gasoil.
The cost of buying a 10 ppm sulphur diesel is currently about $3 a barrel more expensive than a 0.5 percent sulphur gasoil cargo in Singapore.
Samsung Total is building a 145,000 barrel-per-day (bpd) condensate splitter on top of its existing 80,000 bpd condensate splitter, which is expected to be completed in the second half of 2014.
The $1.7 billion aromatics project will also include an investment on a hydrodesulfurization unit, which removes sulphur from fuel, a source said.
Once the project is ready, the company will be able to produce diesel, two sources said on Friday.
Samsung Total has been exporting about one medium-range (MR) vessel of jet fuel per month since 2010, mainly to China, from its existing condensate splitter.
This will likely go up to four MR-sized jet fuel cargoes a month and two 10 ppm sulphur diesel cargoes a month from 2014, one of the sources said.
The cargoes will likely be exported to China, due to its proximity to the facility in Daesan, South Korea, the source added.
The addition of the barrels would likely add to a glut of low sulphur diesel supply in Asia, where many of the developing nations have yet to make the switch to the more costly and environmentally friendly fuel, traders said.
A condensate splitter processes condensates to produce around 50 percent naphtha and a large portion of middle distillates.
Splitters are usually cheaper and produce more naphtha and gasoline than the conventional refinery, traders said.
Samsung Total also currently exports gasoline to Japan with production from the condensate splitter.