Business

Argus Media: Asian LSFO margins exceed two-year lows on high supply

Singapore low-sulphur fuel oil margins against Dubai crude values have fallen to over two-year lows, against higher inflows to the city-state and demand, according to Argus Media.

Published

2 years ago

December 16, 2022

Admin

Singapore low-sulphur fuel oil (LSFO) margins against Dubai crude values have fallen to over two-year lows, against higher inflows to the city-state and demand possibly taking a hit from recessionary fears moving forward.

15 December 2022

Margins fell to $7.82/bl on 13 December, the lowest levels since the $7.72/bl on 2 November 2020, according to Argus' assessments.

The fall is likely the result of higher low-sulphur residual inflows to Singapore from the west of Suez and Asia-Pacific this month, market participants said, estimating it to be around 2mn t. Total low-sulphur residual inflows to Singapore in December are projected to be around 2.35mn t so far, higher than the average of 2.18mn t/month in 2021, according to data from oil analytics firm Vortexa.

Incremental LSFO inflows to Singapore from Kuwait – and expectations of more to come – is likely pressuring margins as well, traders said. Kuwait's state-owned KPC sold the first 100,000t (645,000 bl) LSFO cargo from its new 615,000 b/d Al-Zour refinery for 28-29 November loading. The cargo was likely sold to BP and loaded on the tanker Ridgebury Nicholas A from Kuwait over the same dates, and Fleetmon data shows the tanker's current position is in the Malacca Strait.

Al-Zour is a topping refinery which produces LSFO mainly for local power plants, with the excess to be exported. Al-Zour is projected to produce 10-12mn t of LSFO per year when all units come online, sources close to the company said, of which around 5mn t/year will be exported after domestic power generation and bunker demand is fulfilled. Apart from the LSFO cargo, KPC has sold two 80,000t heavy fuel oil (HFO) cargoes for December-loading, with one more 80,000t cargo for 20-21 December loading in the process of being sold.

India's state-controlled BPCL also recently resumed its VLSFO exports, offering three 20,000t cargoes for November and December-loading, its first offers since March. The first cargo has likely been discharged in Singapore in end-November, according to Vortexa data.

Singapore's onshore residual fuel oil inventories were at three-week highs of 20.306mn bl in the week to 7 December, according to Enterprise Singapore data, also just slightly lower than average inventory levels in December 2021 at around 20.375mn bl. Projected higher inflows to the city-state could increase supplies to higher than year-earlier levels, depressing margins.

Market participants also noted that bunker suppliers clearing stocks with the year-end closing of books could contribute to more sales and an injection of supplies into markets, though one said that not all companies' financial years conclude in December. Traders also said that fears of an impending recession have not hit bunker demand yet but could be factored into crack and spread values from January onward.

Delivered premiums, or the price of VLSFO bunkers over cargo, have been trending upwards so far in December to an average of $36/t compared to $29/t in November as a result of tight prompt supplies, according to Argus data.

Availabilities are now improving, local traders said, although premiums are also set to spike during the festive period for prompt deliveries as is typically the case. But overall demand sentiment is increasingly turning bearish going into the new year.

"I expect demand to be down significantly in the first quarter of next year relative to this year", a local trader said.

But VLSFO bunker prices in Singapore are currently significantly lower than in competing ports in South Korea and to a lesser extent, China, which could shift some demand to the city-state.

Singapore noted a strong increase in bunker sales in November but is set to see total consumption this year decline by about 2mn t relative to 2021, to about 48mn t.

By Sarah Giam and Sammy Six

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Photo credit and source: Argus Media
Published: 16 December, 2022

Legal

Shell MGO bunker heist: Bunker clerk gets jail time for helping Sentek acquire misappropriated fuel

Wong Wai Meng was sentenced to seven years, four months and two weeks’ jail on 10 January for helping the company acquire more than 28,000 mt of the misappropriated fuel worth USD 13.58 million.

Published

14 hours ago

January 13, 2025

Admin

A bunker clerk, who was previously employed by Sentek Marine & Trading (Sentek), was sentenced to seven years, four months and two weeks’ jail for helping the company acquire more than 28,000 metric tonnes (mt) of the misappropriated fuel worth USD 13.58 million (SGD 18.26 million), The Straits Times reported on Friday (10 January).

Wong Wai Meng, was working for Singapore-based firm Sentek at the time of the offences.

Wong, who received more than USD 286,000 from the company for his assistance, pleaded guilty in November 2024 to 12 counts of intentionally helping the company acquire the misappropriated fuel.

He committed the offences over 46 occasions between August 2014 and December 2017.

Wong is among the three bunker clerks previously employed by Sentek, who were charged for offences under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA) and the Prevention of Corruption Act (PCA).

Another bunker clerk among the three charged, Wong Kuin Wah, 61, was sentenced to seven years and six months’ jail on 18 November for his role in misappropriating more than 27,000 tonnes of gas oil worth around USD 12.8 million (SGD 17.2 million).

The third individual who was charged, Boo Pu Wen, reportedly passed away in July 2023 and had his charges abated following his death, meaning Boo’s court proceedings over his 19 charges at the time came to an end.

Former Shell employees, who were key members of a group who dishonestly misappropriated fuel from Shell Pulau Bukom, were sentenced to jail in court earlier.

Earlier coverage of developments by Manifold Times regarding the Shell MGO bunker heist can be found below:

Photo credit: Katrin Bolovtsova
Published: 13 January, 2025

Winding up

Singapore: Liquidator issue notice of intended dividend for Parakou Shipping

Creditors will need to produce proofs of debt to liquidator of Parakou Shipping by 24 January, according to Government Gazette notice.

Published

14 hours ago

January 13, 2025

Admin

A notice to declare intended dividend of Parakou Shipping Pte Ltd to its creditors has been posted on the Government Gazette on Friday (10 January).

The following are the details of the notice of intended dividend for the first dividend:

Name of Company : Parakou Shipping Pte Ltd (In Creditors’ Voluntary Liquidation)

Address of Registered Office : c/o KordaMentha, 16 Collyer Quay, #30-01, Singapore 049318

Last Day of Receiving Proofs : 24 January 2025 (if not already lodged)

Name of Liquidator : Cameron Duncan

Address : c/o KordaMentha, 16 Collyer Quay, #30-01, Singapore 049318

Photo credit: steve pb from Pixabay
Published: 13 January, 2025

Alternative Fuels

DNV: LNG dominates alternative-fuel vessel orderbook for 2024

According to DNV, LNG was the industry’s alternative fuel of choice by year-end; 264 LNG vessel orders were placed in 2024, over double that of 2023 which was 130 orders.

Published

14 hours ago

January 13, 2025

Admin

The maritime industry’s exceptional newbuilding year 2024 drove a significant rise in orders for alternative-fuelled vessels, according to the latest data from DNV’s Alternative Fuels Insights (AFI) platform.

A total of 515 such ships were ordered, representing a 38% year-on-year increase compared to 2023, underscoring the industry's growing commitment to decarbonization.

The growth in alternative-fuelled vessel orders has been heavily driven by the container and car carrier newbuild boom over the last three years. In 2024, 69% of all container ship orders were for ships capable of being powered by alternative fuels, driven by cargo owners responding to consumer demands for more sustainable practices and liner companies preparing to replace older tonnage. The preferred fuel choice for this segment was LNG (67%). In total the container and car carrier segments made up 62% of all alternative fuel orders in 2024.

Knut Ørbeck-Nilssen, CEO Maritime at DNV, said: “As we work towards decarbonizing the industry, we are encouraged by the growth in alternative fuel vessels over the past few years. While recent figures are promising, we must keep pushing forward.”

“The technological transition is underway, but supply of alternative fuel is still low. As an industry we need to work with fuel suppliers and other stakeholders to ensure that shipping has access to its share of alternative fuels in the future. It is also important that the safety of seafarers is ensured as we make this transition. This will require investment in upskilling and training.”

LNG was not the only fuel on shipowners’ minds as 2024 saw them betting on multiple alternative fuels. 166 methanol orders were added (32% of the AFI orderbook), reflecting shipping’s growing interest in a diverse fuel pool as it strives to reduce greenhouse gas emissions. Most of these methanol orders (85) were in the container segment.

While methanol drove newbuilding orders for alternative-fuelled vessels at the beginning of the year, LNG was the industry’s alternative fuel of choice by year-end. The number of LNG vessel orders placed in 2024 was 264, over double that of 2023 (130).

Ammonia saw promising momentum in the earliest months of the year and continued to grow throughout 2024. A total of 27 orders were placed for ammonia-fueled vessels. The first non-gas carrier ammonia-fuelled vessels orders were placed in 2024 (10), mainly in the bulk carrier segment (5). While still in its early stages, this provides further evidence of ammonia's emergence in the alternative fuel market.

Deliveries and bunkering

The number of LNG-fuelled ships in operation doubled between 2021 and 2024, with a record number of deliveries (169) in 2024. By the end of 2024, 641 LNG-powered ships were in operation. According to the AFI orderbook, this number is expected to double by the end of the decade.

While the bunkering infrastructure for some alternative fuels remains underdeveloped, LNG bunkering is maturing. The number of LNG bunker vessels in operation grew from 52 to 64 over the last year, with continued growth expected in 2025. The significant gap between LNG bunkering supply and demand is expected to widen over the next five years based on the AFI orderbook.

Addressing this challenge by developing the appropriate infrastructure for alternative fuels – both for vessels and bunkering - can create demand signals to stimulate long-term fuel production. With the EU regulatory package, Fit for 55, setting requirements on a large network of ports to have LNG bunkering infrastructure, it is expected that the availability of LNG in ports will increase.

Jason Stefanatos, Global Decarbonization Director at DNV, said: “Market conditions, infrastructure development, fuel production updates, and cargo owners' needs are all shaping the demand for different fuels, both in the short and long term.”

“The shifting trends in LNG and methanol orders this year might be due to the slow development of green methanol production. In the long run, green methanol has potential to be part of the energy mix along with ammonia.”

“In parallel, LNG offers a vital bridging fuel option benefiting from existing infrastructure and short-term emissions reductions while being capable of acting as a long-term solution as well, assuming RNG (Renewable Natural Gas) will be available and provided at a competitive price.”

Photo credit: DNV
Published: 13 January, 2024