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Interview: Minerva Bunkering on expansion drive after bolstering Singapore presence

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Interview: Minerva Bunkering on expansion drive after bolstering Singapore presence

Highlights

Minerva's physical deliveries in Singapore likely to start in 2-3 weeks

Company's bunker fleet in Singapore can be enhanced to meet demand

Minerva to develop dual-fueled barges in Singapore within three years

Singapore — Minerva Bunkering, among the world's largest bunker fuel players, continues to seek growth opportunities globally, both organically and via acquisitions, as it expands its role as a physical bunker supplier while also strengthening its trading activities, company CEO Tyler Baron told S&P Global Platts in an interview.

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This comes even though the coronavirus pandemic has hit global markets severely, with the bunker market also slammed.

In Singapore, the world's largest bunkering port, Minerva Bunkering was awarded a bunker supplier license recently.

"We have been operating in Singapore since 2014, serving clients on a trading and ex-wharf basis," Baron said, adding that with the award of the license, the company anticipates to commence physical deliveries in Singapore within the next two-three weeks.

The company plans to supply low sulfur fuel oil, low sulfur gasoil and HSFO in the Port of Singapore through its barges, Baron said.

"In Singapore, currently, we own two bunker tankers, which we will utilize. However, we can also move in additional bunker tankers to the market from our existing fleet or time charter barges, based on our needs," he said.

"We have a fleet of 40 bunker tankers. The fleet is operated by Minerva subsidiary MM Marine. The fleet was part of the acquisition of Aegean in April 2019," Baron added.

In recent weeks, the Singapore bunker market has been shuddered by the Hin Leong Trading debacle, with its subsidiary Ocean Bunkering Services halting marine fuel deliveries since April 18.

"The Singapore bunker market is in a state of readjustment because of macroeconomic factors as well as local disruptions," Baron said.

Still, the existing number of accredited bunker suppliers in Singapore are expected to be adequate to meet current demand, Baron said.

Minerva's expansion in Singapore comes after it acquired Cepsa's physical bunker business in Panama last year. Earlier this year, Minerva restarted physical operations in Fujairah by utilizing the license formerly held by Aegean and becoming an active licensed bunker supplier at the port.

Meanwhile, Minerva Bunkering will also continue to bolster its trading presence worldwide as these activities complement its physical bunkering business, Baron said.

Industry outlook

Baron said he expects marine fuel demand to fall between 5%-25% in the major bunker hubs and smaller ports worldwide, as the coronavirus pandemic pushes crude oil in a contango and destroys global oil demand.

"We believe the industry has and will continue to consolidate to reap benefits of scale," Baron said.

The tightening availability of financing, heightened credit risks and the challenges brought about by current tough market conditions including those posed by the recent transition to the International Maritime Organization's global sulfur mandate for marine fuels, will likely pressure smaller players, Baron said.

Meanwhile, the IMO 2020 rule has been overshadowed by recent events.

"If we went back six months ago, a primary concern over the transition to IMO 2020 was on the high cost of fuel and related availability of trade credit," Baron said.

"This has certainly not played out as expected," Baron said, referring to the collapse in oil prices.

Some of the other concerns such as compatibility and stability of VLSFOs have highlighted the importance of control of the supply chain to ensure that the molecules are not contaminated, he said.

Cleaner fuels thrust

Minerva Bunkering is very agile in terms of catering to customer needs, Baron said, adding that the company is also interested in participating in LNG bunkering growth opportunities in future.

"We think we have a role to play in developing LNG infrastructure but demand has to justify the substantial investment to make sense," Baron said, adding that LNG bunkering was still a long term IMO 2020 compliance solution because of the barge and infrastructure costs involved.

After being awarded a bunker supplier license in Singapore, the two new players Minerva Bunkering and TFG Marine "will also be required to each operate at least two clean energy dual-fueled bunker barges", the Maritime and Port Authority of Singapore said in a statement last month.

"The MPA has demonstrated leadership to improve the environmental footprint of the local industry. For our part, we have committed to developing dual fueled barges in Singapore within three years' time as the MPA looks to progressively improve the standards of the local fleet," Baron added.

Minerva Bunkering is a subsidiary of global energy and commodity trading group Mercuria. Minerva has physical operations at 30 ports and 24-hour trading covering 150 ports. It owns 40 ships and operates 1.9 million cu m of storage on the bunkering side.