SK Energy to issue green bonds worth $251 mln for desulfurization facility

By Lim Chang-won Posted : September 9, 2019, 10:55 Updated : September 9, 2019, 10:55

[Courtesy of SK Energy]

SEOUL -- SK Energy, a major South Korean energy company which produces petroleum products, will issue green bonds worth 300 billion won ($251 million) in September to raise funds for the construction of facilities to produce low-sulfur fuel oil for ships. Demand for low-sulfur fuel oil is expected to surge due to new environmental regulations.

SK Energy, an arm of South Korea's SK Group, said it would consider expanding the size of green bonds to 500 billion won, depending on the results of demand analysis and forecasting on September 18. The issue date is September 26. Green bonds are intended to encourage sustainability and to support climate-related or other types of special environmental projects.

With an investment of more than 1 trillion won, SK Energy plans to complete the construction of vacuum residue desulfurization (VRDS) facilities by early next year at its refinery complex in the southeastern industrial city of Ulsan to produce 40,000 barrels of low sulfur per day. The company plans to expand production at the desulfurization plant.

Under new rules imposed by International Maritime Organization (IMO), a U.N. maritime safety agency, the amount of sulfur emanating from ships should be reduced from 3.5 percent to 0.5 percent from January 1, 2020. The International Energy Agency (IEA) predicts that demand for low-sulfur fuel oil would increase from 100,000 barrels per day this year to one million barrels in 2020.
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