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Analysis: Singapore may witness robust bunker sales for third consecutive year

Singapore will remain world's top bunkering hub post 2020: Maersk executive

Singapore — Singapore will continue to be the world's largest ship refuelingdestination going into 2020 and beyond, Maersk regional trading head PeterBeekhuis said Friday at the S&P Global Platts Asian Refining Summit inSingapore.

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"The efficiency, transparency and the infrastructural advantage will holdSingapore in good stead," Beekhuis said in response to an apparent concernthat the city-state may likely lose its dominant position to other bunkeringdestinations, especially China, within this region, in a low sulfur emissionsworld.

The International Maritime Organization's 2020 global sulfur cap rule,hailed as one of the most significant changes for the shipping industry,starts January 1, 2020. It requires shipowners worldwide to burn marine fuelwith maximum 0.5% sulfur content, as compared to a maximum of 3.5% currently.

With an expectation that a fair share of marine fuels would originatefrom the distillate part of the barrel going into 2020, there has been somespeculation that countries long middle distillates would be at an advantage tocater to this potential demand.

"Singapore imports about 80% of fuel oil to meet its current bunkeringdemand. Going into 2020, this may rise to 85% or 90% or perhaps even more, butthe country's status as a trading hub will not change," Beekhuis said. "Somevolume may shift within the region, but not [enough] to displace Singapore'sstatus as the top bunkering hub," he added.

"When Singapore made it mandatory for fuel oil deliveries to be madeusing mass flow meters at the start of 2017, there were some concerns thatdemand will shift away, but if you look at what happened in terms of volume,it just shows that shipowners liked it," Beekhuis said.

Singapore's 2017 bunker demand rose 4.2% year on year to a record 50.6million mt. Annual vessel arrival tonnage increased 5.1% to 2.8 billion grosstons. The maritime industry contributes 7% of Singapore's GDP and employs over170,000 people.

Maersk Oil Trading helps meet about 12 million mt/year of A.P. MollerGroup's bunker demand worldwide. It trades about 200,000 mt/month of bunkerfuel between Singapore and Tanjung Pelapas.

--Rajesh Nair, rajesh.nair@spglobal.com

--Edited by Geetha Narayanasamy, geetha.narayanasamy@spglobal.com