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OW Bunker, one of the world’s leading physical distributors and resellers of marine fuels, today announced that it has signed a memorandum of understanding (MoU) with Genoil, the global engineering technology development company.

The relationship has been established to build a facility that can produce 0.1% low sulphur fuel oil, and provide ship owners and operators with the opportunity to buy a cheaper product than distillates that still meets ECA compliance regulations.

As part of the agreement, Genoil will finance the building of a Hydroconversion Upgrading System (GHU) within Europe. The facility is primarily designed for hydrocracking and the desulphurisation of fuel oils. OW Bunker will provide the initial feed oil for the GHU and, following the desulphurisation process, will agree to buy one million tonnes of 0.1% low sulphur fuel oil at an agreed price each year.

Steffen Kortegaard, Technical Director, OW Bunker, said: "Many ship owners and operators are concerned about the impact that ECA regulations will have on their bottom lines. As a leading global fuel distributor, we believe we have a responsibility to our customers to look at all options and innovations for compliance beyond expensive distillates to help them maximise control over their operational costs. While we are still in the early stages of this initiative, we are pleased to be partnering with Genoil, and look forward to working together to bring it to fruition."

As part of the hydrocracking process, the feed oil product is heated up to over 320°C and pressurised to 120 bar in a hydrogen-based atmosphere and passing multiple catalysts in one or more reactors. The hydrocarbon atoms are cracked into smaller and lighter fractions, and the sulphur atoms bind with the hydrogen to create hydrogen sulphide. Following the cracking process, separation and distillation takes place creating naphtha, liquefied petroleum gas (LPG) and low sulphur fuel oil (LSFO). Waste products including water and ammonia are treated and sustainably recycled.

It is anticipated that it will take a minimum of three years from commencing the building of the GHU, to the production of the first low sulphur fuel oil.

Commenting on the relationship, Bengt Koch, Director, Genoil said: "It is great to join forces with OW Bunker on this project, and we are excited that this opportunity is coming together quickly. Despite the challenges that ship owners and operators face, we have always believed that technology and innovation provides the foundation for ensuring compliance, and that it will also create a better, more profitable and more sustainable industry going forward."