Zhejiang Pilot Free Trade Zone to Ensure Sufficient LSFO Supply
On March 26, China’s State Council approved the Several Measures to Support the Development of Oil and Gas Industry Chain in China (Zhejiang) Pilot Free Trade Zone. Some guides were introduced in the Measures to support the LSFO supply and the innovation and growth of the shipping industry at China (Zhejiang) Pilot Free Trade Zone.
First, some solutions will be issued to improve the LSFO supply system at the free trade zone. China (Zhejiang) Pilot Free Trade Zone will be supported to be built into a LSFO production base, and various sources of LSFO blending components will be encouraged to reduce the production cost of bonded bunker. The blending of bonded blending components is an important method to reduce the LSFO production cost. The coronavirus outbreak is dragging down China’s bonded bunker demand, and currently, China’s bonded bunker is still mainly imported from Singapore and Malaysia. China stated the value-added tax rebate policy on fuel oil exports in January, but the international shipping industry is influenced greatly by the COVID-19. Therefore, the low sulfur marine fuel prices dropped sharply in the past two months, and this shrinks refineries’ LSFO profit. In addition, bunkering companies’ sales volume went down obviously, which weighed down refineries’ sentiment to produce LSFO. As of the end of March, a total of 125,000mt of LSFO got the tax rebate, and Sinopec, PetroChina, CNOOC and ZPC were main players of LSFO exports. Other bonded bunkering companies still rely on imports.
Second, China (Zhejiang) Pilot Free Trade Zone will continue to introduce supportive policies to support the oil and gas industrial development. It will support the development of international bunkering business and support the construction of oil and gas storage facilities. Zhoushan’s deep-water shoreline is rare in the world. The total length of its deep-water shoreline suitable for developing and constructing ports is 280km, accounting for 18.4% of China’s total. In recent years, a batch of oil storage and transportation projects have been planned or constructed on Aoshan Island, Huangzeshan Island, Shuangzishan Island, Xiaoqushan Island, etc. The city’s oil storage capacity has reached 26 million mt. By the end of 2020, the oil storage capacity will reach 40 million mt. Next, it will further strengthen the construction of oil storage and transportation infrastructure, explore to reform the oil storage system, and actively introduce large oil companies from oil-rich countries and famous international oil traders to develop commercial oil storage.
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