SK Innovation eyes low-sulfur oil

In the face of stricter international regulations on sulfur oxides, a group of major pollutants, SK Innovation, Korea’s largest oil refiner, is vying to take the lead on the low-sulfur fuel business.

Sulfur oxides are produced when ship engines burn crude oil. The International Maritime Organization has mandated that ships lower their sulfur oxide emissions from the current 3.5 percent to 0.5 percent by 2020.

In response to the change, SK Innovation said it would expand production of low-sulfur fuel through its subsidiary SK Trading International (SKTI).

SKTI has been making low-sulfur fuel in Singapore ever since it leased a large oil tanker there in 2010. With demand for low-sulfur fuel expected to rise in Singapore, blending the oil on a tanker there instead of in Korea helps cut costs on logistics, but it is a complex process.

SKTI is the only Korean company able to generate low-sulfur fuel onboard a tanker, according to the company, and it is able to produce about one million tons of low-sulfur fuel oil per year.

The company plans to double its production of ultra-low-sulfur fuel this year. Ultra-low-sulfur fuel contains less than 0.1 percent sulfur oxides.

Elsewhere, SK Innovation has also been investing in eco-friendly energy. Last year, the refiner invested 1 trillion won ($899,000) in a new desulfurization facility at its Ulsan factory. The facility will make SK Innovation the top producer of low-sulfur fuel in Korea.

“SKTI was able to expand its business by making stricter regulations into a new opportunity and attempting to blend oil on a ship even though it was considered a challenging area in the industry,” an SKTI spokesman said.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]