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Watch: Singapore's bunker industry set to embrace mass flow meters for marine gasoil ahead of IMO 2020 rule

Singapore, the world’s largest bunkering port, is ready to implement the mass flow meters mandate for distillate fuel deliveries in 2019.

In this video, S&P Global Platts editor for bunker fuels Surabhi Sahu explains how this move is not only set to enhance transparency in the bunker industry but also position Singapore comfortably for the International Maritime Organization's upcoming global sulfur limit rule for marine fuels.

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Video Transcript

Singapore's bunker industry set to embrace mass flow meters for MGO ahead of IMO 2020 rule

By Surabhi Sah

Welcome to The Snapshot - our series examining the forces shaping and driving global commodities markets today.

In this episode, we will take a look at how Singapore, the world’s top bunkering port, is preparing for the International Maritime Organization's upcoming global sulfur rule.

The rule brings into force the 0.50% limit in sulfur in marine fuels from January 1, 2020 from the 3.5% currently. It applies outside designated emission control areas where the limit is already 0.10 %.

Maritime and Port Authority of Singapore announced that it will implement the Mass Flow Meters mandate for distillate deliveries from July 2019. MFMs measure the flow rate in the pipe, gauging the quantity as well as the mass and density of the fuel.

The announcement came after the extremely positive feedback from the bunker industry on the mandatory use of MFMs for marine fuel oil deliveries from January 1, 2017.

This is a significant move because gasoil is expected to become the predominant fuel of choice for the shipping industry come 2020.

The MPA is also providing a co-funding program for installing these MFMs.

Similar to the use of MFM for marine fuel oil delivery, the use of MFM for distillates will provide better assurance to both the bunker buyers and suppliers on the quantity of bunker delivered and enhance operational efficiency.

One potential consequence of the MFM mandate for MGO, however, is a possible rationalization of the industry due to potential forced or voluntary exits even though bunker sales in the city-port are expected to grow unabated.

This happened when MFMs where mandated for fuel oil deliveries. So some industry players in the MGO market could meet a similar fate.

Currently, there are about 213 registered bunker tankers in Singapore -- 130 are for fuel oil, 71 are for MGO, 11 are dual-fueled, and 1 is for ultra-low sulfur fuel oil.

Come 2020, many industry sources expect that the ratio of MGO: MFO bunker tankers could reach as high as 2:1.

Suppliers are already investing in marine gasoil bunker tankers and those with existing modern bunker barges, originally meant for fuel oil, are also expected to tidy up their tanks to switch them for MGO deliveries.

This supply side response is expected as demand for cleaner fuels accelerates; particularly because the uptake of scrubbers is expected to remain slow, at least initially.

Also noteworthy is Singapore’s impetus towards LNG bunkering. It has already spearheaded the creation of a network of LNG-ready ports that includes 11 ports worldwide.

It launched the technical reference or TR 56 standard for LNG bunkering last year and is also developing LNG infrastructure rapidly.

Until next time on the Snapshot, we’ll keep an eye on the markets.