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Feature: IMO 2020 draws more participants into Singapore's bunkering pool


Changing marine fuel market spurs entry of new players

Petrobras, Mitsui target ex-wharf 0.5% low sulfur bunker fuel supplies

Freepoint, Marubeni among companies expanding into marine fuel

Singapore — More companies are entering the Singapore marine fuel market, hunting for opportunities ahead of the International Maritime Organization's global sulfur limit for bunker fuels that is expected to drive demand for cleaner fuels, industry sources told S&P Global Platts.

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"We are seeing more companies returning to the Singapore market, some of which have been quiet for the last few years. Suddenly they are more active this year," a Singapore bunker trader said.

At least two companies Petrobras and Mitsui have confirmed to Platts that they plan to expand their business activities in Singapore, the world's largest bunkering port.

Several others including Freepoint Commodities and Marubeni Corporation were also getting more active in the marine fuel market than before, according to market sources. But this could not confirmed with both companies.

The IMO regulations will cap global sulfur content in marine fuels at 0.5% starting January 1, 2020 compared with the current 3.5%.

The viability of new fuels such as low-sulfur fuel oil, LNG, biofuels, methanol has opened the market to more companies that were outside the traditional high sulfur fuel market in the past, traders say.

"People are capitalizing on the compliant fuels business, especially those who have been traditionally strong in low sulfur fuel oil production," another bunker trader said.

Key drivers include catering to customer needs and maintaining good LSFO quality while optimizing efficiency in barging turnarounds and operations, they said.

Singapore is already facilitating a smooth transition to IMO 2020 by readying its fleet of bunker barges to deliver an array of IMO-compliant bunker fuels.

"As of August 1, all 199 licensed bunker tankers for supply of fuel to ocean-going vessels have been fitted with calibrated mass flow meters (MFM) and can supply various blends of compliant fuels," a spokesperson at the Maritime and Port Authority of Singapore told Platts recently.

Singapore bunker fuel sales


Prominent among the companies making a more active comeback to the Singapore bunkering market is Brazilian state-led oil company Petrobras, which began supplying ex-wharf 0.5% low sulfur bunker fuel at Singapore in July, a company representative told Platts.

"Petrobras is known to be a producer of sweet crude grades, and a supplier of LSFO streams to Singapore market since the beginning of the ECA [emission control areas] zones," said the Petrobras representative who did not wish to be named.

"With IMO 2020, given the position that Petrobras has on [the] LSFO market, it makes all the economic sense to be as well back to the bunker market [for 0.5% sulfur]," he added.

The company has already taken up LSFO storage space at Horizon terminal since April this year, and plans to use their components to blend RMG 0.5% and sell it on an ex-wharf and delivered basis, he said.

"Currently, Petrobras has a storage of 120,000 mt, and the plan is to sell around 100,000-150,000 mt per month on an ex-wharf basis," he added.

Meanwhile, Japanese trader Mitsui & Co., Ltd., which already has deep roots in the Asian low sulfur fuel market is expanding, with an aim to provide 300,000-400,000 mt/month of ex-wharf 0.5% bunker fuel to the Singapore market, a company spokesperson said.

"Mitsui has a long history of blending and producing 0.1-0.5% LSFO in the region and has been a stable strong supplier to several different countries' power plants, which makes natural sense to us to be activated in this upcoming LSFO bunker market as well," the Mitsui spokesperson said.

The company was still considering whether to trade any high sulfur fuel oil or low sulfur marine gasoil in the near term, he said.

US-headquartered Freepoint Commodities is ready to supply 0.5% LSFO starting in the fourth quarter of this year, while Marubeni Corporation is likely to expand its bunker volumes this year, market sources say.

For its part, Freepoint entered into a multi-year agreement with Indonesia's state-run Pertamina to buy vacuum residue produced at the latter's 133,700 b/d Plaju refinery and decant oil from the 125,000 b/d Balongan plant from July, Platts reported earlier.

As part of the May 3 deal, Freepoint will use at least 50% of the terminal's capacity to store low sulfur materials, including products it will load from Plaju and Balongan from July, several Singapore-based traders said.

Pertamina and Freepoint have also signed the heads of agreement to optimize utilization of the Sambu Island Fuel Terminal, located just 10 miles south of Singapore.

Pertamina typically sells three to four 80,000-barrel cargoes each month of vacuum residue with maximum 0.4% sulfur, and 200,000 barrels each month of decant oil with maximum 0.5% sulfur and viscosity of 50 CST from Balongan.

Freepoint was not available for comment when contacted.

Contrary to the broader trend, a few trading companies such as Marubeni are expanding their high sulfur fuel business, despite projected contraction in that market heading into 2020, some sources said. A Marubeni spokesperson declined comment on this matter.

--Jeslyn Lerh,

--Surabhi Sahu,

--Rajesh Nair,

--Edited by Nurul Darni,