Japanese trading company Mitsui & Co. will produce more heavy crude oil this year once projects in Australia and Italy are completed, a senior company official said, in part boosting its ability to provide low sulfur marine fuel.
Heavy crude production from the Tempa Rossa project in Italy could start soon, while the Greater Enfield project in Australia is on track to resume production by the middle of this year, Yuji Kikkawa, general manager of strategic planning for Mitsui's energy business units, told Reuters.
The new production will be timely as output cuts by Saudi Arabia and U.S. sanctions on Iran and Venezuela have reduced the availability of high-sulfur heavy crude oil globally and lifted spot premiums for these grades.
Heavy sour crude production at Tempa Rossa, an onshore oil field located in the Basilicata region in southern Italy, could peak at 50,000 barrels per day. Total operates the project, while Mitsui E&P and Royal Dutch Shell each hold a 25% stake.
The Greater Enfield project offshore west Australia will tie heavy sweet crude output from new fields to the Ngujima-Yin FPSO facility, located over the Vincent oil field. Initial production will be at 40,000 bbl/d while the FPSO has a production capacity of 120,000 bbl/d.
Trading houses have been blending heavy sweet crude from Australia with fuel oil to reduce the fuel’s sulfur content ahead of tougher global marine fuel rules.
The International Maritime Organization will prohibit ships from using fuels with a sulfur content above 0.5% from Jan. 1, 2020, compared with 3.5% today, unless they are equipped with exhaust gas cleaning systems.
“We certainly see that as a great opportunity for our trading activities because Mitsui has been very active in low-sulphur fuel oil trading thanks to past success in securing Indonesian low-sulfur feedstock and having Japan as a traditional main market for the fuel,” Kikkawa said.
Mitsui’s total oil and gas production, through its equity holdings, currently stands at 250,000 barrels per day oil equivalent.
The company also expects to see a near doubling of its LNG supplies to 9 million tonnes per year once three phases of the U.S. Cameron LNG project startup over 2019.
Mitsui will employ up to seven LNG tankers under long-term contracts to ship fuel from Cameron LNG to buyers and for its spot trading activities, Kikkawa said.
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