Kuwait dominates ship fuel sales to Qatar as Al Zour refinery finds new markets

Kuwait has become the leading supplier of ship fuel to Qatar, one of the world's largest LNG producers and exporters, with its recently opened Al Zour refinery taking market share with products including fuel oils, jet fuel, diesel, naphtha and gasoline.

Al Zour has shipped about 3 million barrels of fuel oil to Qatar in 2023, taking over from last year's suppliers including Bahrain, Malaysia and Singapore, according to Kpler shipping data.

The refinery began exporting jet fuel, naphtha, and low-sulfur fuel oil in November after commissioning the first of its three crude distillation units with plans to have production capacity of 615,000 b/d by the end of this year.

Exports of very low sulfur fuel oil to Qatar hit an all-time high 27,000 b/d in March, according to Kpler. Exports have continued to flow with Doha receiving 20,000 b/d of VLSFO in June and 19,000 b/d in July.

"Qatar had to import VLSFO from places as far as Malaysia and India in 2021 and 2022 but in 2023 Kuwait emerged as Qatar's sole supplier of VLSFO," Iman Nasseri, Middle East managing director at Facts Global Energy in Dubai, said. "Singapore was importing VLSFO mainly from Malaysia in 2022 but total net exports from Malaysia sharply dropped in 2023 with Singapore sourcing more VLSFO from Kuwait instead as well post-Al-Zour commissioning late 2022."

Al Zour will be largely responsible for an increase in Middle East refinery runs in the third quarter, rising about 350,000 b/d from the second quarter, according to the August Middle East short-term outlook by S&P Global Commodity Insights. Fuel oil production will get a boost in the second half by Al Zour, it said.

Al Zour hopes to double its jet fuel exports to Europe this year, from last year, according to S&P Global. It will also help the Middle East to boost diesel/gasoil production to more than 3 million b/d for the first time.

European flows

Flows to Qatar follow Kuwait's earlier ramp-up of clean products to Europe. Exports surged to an all-time high of 410,000 b/d in June but declined to 302,000 b/d in July, according to Kpler. The main products being sold into Europe, which has been looking for alternatives to Russian imports include ultra low sulfur diesel and jet fuel.

In July, Kuwait National Petroleum Company exported 35,000 mt of 95 octane gasoline from Mina al-Ahmadi to Europe via the Pacific Sarah tanker.

At least two-thirds of the Al-Zour's production will be diverted to overseas markets, as opposed to original plans to use the supplies as a replacement for fuel oil consumed to produce electricity in Kuwait, Sheikh Khaled al-Sabah, KNPC parent company Kuwait Petroleum Corp.'s managing director of international marketing, told reporters on the sidelines of the Middle East Petroleum & Gas Conference in Dubai.

The refinery began exporting naphtha, jet fuel and low sulfur fuel oil in November after commissioning the first of its CDUs.

Meanwhile, the Clean Fuels Project modernized and raised the capacity of the Mina al-Ahmadi and Mina Abdullah refineries into a single 800,000 b/d complex. It is designed to produce clean products conforming to Euro-4 and Euro-5 environmental specifications.