Shell Mulls Refinery Upgrade to Meet 2020 Sulphur Rules

Royal Dutch Shell is considering expanding the capacity of one of its German refineries to make oil products that meet an upcoming cap on the sulphur content of fuels used in shipping.

In the past few days, Rheinland refinery representatives met local officials and environmental groups to present preliminary plans for an investment at the plant's 140,000-barrels-per-day Wesseling site, Shell said on the refinery's website.

Shell is considering "a modernization of the residue processing unit at Rheinland refinery and to enhance the desulphurisation plant there", Shell told Reuters in an emailed statement.

Shell declined to give further details on the project, saying it was in the "very early phase of the planning process".

The International Maritime Organization, the United Nations' shipping agency, set global regulations in late 2016 to cap sulphur content in shipping fuel at 0.5 percent, versus the current 3.5 percent, from 2020.

Although shippers in the United States and most of Europe already burn low-sulphur fuel oil, a global cap means refiners will need to find a way to eliminate some 3 million bpd of high-sulphur fuel.

A survey by consultancy KBC last month showed that just 15 percent of the global refineries it surveyed know how they will manage the tighter sulphur regulations.

(Reporting by Ahmad Ghaddar)