Business

Argus Media: Compensation adds to Singapore bunker contamination row

There is no blanket fix, with any compensation to parties involved having to be handled on a case-by-case basis, says market participants.

Published

3 years ago

April 28, 2022

Admin

Shipowners that have suffered losses from taking contaminated high-sulphur fuel oil (HSFO) in Singapore are uncertain how they will be compensated, as a market tightness sees delivered premiums for the marine fuel spike.

27 April, 2022

Singapore's Maritime and Port Authority (MPA) on 13 April named trading firm Glencore as the initial supplier of the contaminated HSFO in Singapore, the world's largest bunkering hub. The contaminated fuel was then supplied to Chinese bunker supplier PetroChina, which in turn supplied about 200 vessels in Singapore, with about 80 suffering fuel pump and engine damage because of the presence of chlorinated compounds.

Market participants said that shipowners will possibly see debunkering and replacement of cargo costs met by the supplier of the contaminated fuel, but not the demurrage or potential mechanical repair costs incurred by the vessel.

Oslo-based marine insurance provider Skuld said on 1 April that it had seen an "increased number of protection and indemnity and hull claims related to high-sulphur fuel oil at Singapore and which were found to be contaminated with chlorinated compounds." But when contacted by Argus regarding a potential spread of the contamination beyond Singapore, it declined to offer further comment beyond that already published on its website.

Market participants are varied in their views of how long the situation will take to be resolved, with some saying it will possibly last until the end of May. Others said it could take many months to be finalised. There is no blanket fix, with any compensation to parties involved having to be handled on a case-by-case basis, they added.

Most shipowners are already paying a premium for Gas Chromatography Mass Spectrometry (GCMS) pre-testing, an advanced and more expensive fuel quality test compared with conventional ISO 8217 tests. The results of these tests are usually available in a day. But this has increased to 2-3 days as a result of increased demand following the contamination crisis, further increasing demurrage costs.

Vessels that have taken on contaminated fuel can still sail and usually can make their way to the nearest port for debunkering. It is uncertain what then happens to the contaminated fuel once offloaded. Suppliers might blend down the contaminants in the reclaimed contaminated fuel, although it will be a complicated process requiring large volumes, said market participants.

Glencore placed daily bids for HSFO cargoes in online trading in the first two weeks of April, although it could not be confirmed if this was related to the contamination.

"Contaminated fuel oil retains some of its value, and it might get sold in the market at the cargo price minus $100-150/t or so", said a local buyer whose vessels had also been affected.

Tightness spurs firmer prices

Singapore 180cst HSFO margins against Dubai crude values entered positive territory for the first time since November 2020 at $0.83/bl on 1 April, which was around when the contamination was discovered, on expectations of a tightening of supplies. They then widened to a record $4.38/bl on 12 April, the highest since Argus started assessments in July 2006. They fell to -$0.57/bl on 25 April, probably because of rare regional exports. But this is still higher than average -$6.06/bl margins in the second half of 2021.

The delivered premium, or the additional price of delivered bunker fuel over the cargo price, has averaged $65/t so far this month compared with a more typical $10-15/t. HSFO delivered premiums last reached such levels in September 2019-January 2020 when the marine fuel market was anticipating and navigating the International Maritime Organisation's 2020 global sulphur cap.

Bunker fuels have always been an important component for freight, as it affect shipowners' earnings and at times comprises a sizable portion of the freight cost. The higher fuel costs and uncertainty surrounding the contamination issue have led to shipowners increasing their offer levels, freight participants said. The long downtime taken by vessels as they repair or replace their failed fuel pumps and engines will have reduced the amount of available tonnages, adding further pressure to already tight supply woes in Asia-Pacific.

More stringent regulations by Singapore's MPA are expected to prevent future fuel contamination crises. One such measure could be making GCMS testing mandatory, which a majority of bunker buyers support based on a survey by UK-based bunker broker NSI.

By Sammy Six, Sarah Giam and Sean Zhuang

Photo credit and source: Argus Media
Published: 28 April, 2022

Bunker Fuel

TMD Energy becomes first Malaysian bunker supplier to list on NYSE American

Straits Energy Resources’ subsidiary announces that its shares have been listed on 21 April, becoming the first Malaysian marine bunker supplier to achieve a listing on a major US exchange.

Published

9 hours ago

April 22, 2025

Admin

TMD Energy Limited (TMD Energy), a Malaysia and Singapore-based provider of integrated marine bunkering services and a Straits Energy Resources Berhad (SER) subsidiary, on Tuesday (22 April) announced that its shares have been listed on 21 April and began trading on the NYSE American under the ticker symbol “TMDE”.

Dato’ Sri Ron Ho Kam Choy, Chairman, Executive Director, and Chief Executive Officer of TMD Energy, said: “We are proud to become the first Malaysian marine bunker supplier to achieve a listing on a major US exchange, reinforcing our position as one of the industry’s leading players.

“Leveraging Malaysia’s strategic location along major shipping routes including the Straits of Malacca and the South China Sea, as well as resilient demand for bunker fuel in the region and globally, we are well positioned for further expansion. On top of that, TMD Energy is also the first Malaysian company to list on the NYSE American.

“Our listing in NYSE American will help us to enhance our international profile, expand our reach, capture new markets, and deliver sustainable, higher returns to our shareholders.”

TMD Energy’s share price opened at USD 3.26 on Monday, rising to an all-time high of USD 4.12 on its market debut before closing at USD 3.63, which was 11.69% higher than its initial public offering (IPO) price of USD 3.25 per share. This gave the company a market capitalisation of USD 83.85 million (equivalent to approximately MYR 367.2 million) on its first day as a publicly listed company.

TMD Energy’s IPO was priced at USD 3.25 per share, and total gross proceeds (excluding the over-allotments) before deducting underwriting discounts and other related expenses were approximately USD 10.08 million (equivalent to approximately MYR 44.13 million).

Proceeds from the IPO will be used for the purchase of cargo oil; defraying listing expenses; and working capital and other general corporate purposes.

The company has granted the underwriter a 45-day option to purchase up to an aggregate of 465,000 additional shares to cover over-allotments at the IPO price, If the underwriter exercises their option to purchase the additional shares in full, the total gross proceeds before deducting underwriting discounts and other related expenses from the offering are expected to be approximately USD 11.59 million.

Dato’ David Yoong Leong Yan, Executive Director of TMD Energy, said: “Our debut on the NYSE American is a key milestone in our journey of growth. While continuing to drive strong organic growth, as part of our strategic growth initiatives, we remain focused on identifying and pursuing strategic mergers and acquisition opportunities that align with our long- term vision and strengthen our regional presence.”

Manifold Times previously reported SER announcing its proposal to list its oil bunkering segment via the listing and quotation of the ordinary shares in its 76.68%-owned subsidiary, TMD Energy, on the New York Stock Exchange American (NYSE American).

TMD Energy and its subsidiaries (TMD Energy Group) are mainly involved in marine fuel bunkering services specialising in the supply and marketing of marine gas oil and marine fuel oil to various types of ships and vessels at sea. In addition, the company provides vessel chartering services and vessel management services.

TMD Energy Group operates in 19 ports across Malaysia, with a fleet of 15 well-maintained bunkering vessels with capacities ranging from 540 dwt to 7,820 dwt, of which nine are double-bottom and double-hull vessels with an average cargo-carrying capacity of 4,200 dwt each. Its customers include ship owners and operators, shipping lines, logistics and freight companies, as well as oil and gas traders or brokers.

TMD Energy’s growth strategy includes expanding its market presence across Southeast Asia, growing its bunkering fleet, providing ship management services to external customers and diversifying its fuel offering to include eco-friendly alternative fuels such as biodiesel.

TMD Energy is part of SER, a Fortune Southeast Asia 500 company listed on the ACE Market of Bursa Malaysia Securities.

Photo credit: TMD Energy
Published: 22 April, 2025

LNG Bunkering

New MOL vessel to be supplied LNG bunker fuel in Japan before voyage to Australia

After departing from Saijo Shipyard, LNG fuel will be supplied directly to “Verde Heraldo” through shore-to-ship bunkering at Senboku Terminal of Osaka Gas, and is then scheduled to sail for Australia.

Published

9 hours ago

April 22, 2025

Admin

New MOL vessel to be supplied LNG bunker fuel in Japan before voyage to Australia

Mitsui OSK Lines (MOL) on Friday (18 April) said the naming and delivery ceremony for the LNG-fuelled Capesize bulker, which MOL ordered for JFE Steel Corporation, was held at the Saijo Shipyard of Imabari Shipbuilding.

The vessel was named the Verde Heraldo, which means “Green Pioneer” in Spanish, by JFE Steel President and CEO Masayuki Hirose. MOL executives including President & CEO Hashimoto were also on hand for the ceremony.

After departing from Saijo Shipyard, LNG fuel will be supplied directly to the vessel through shore-to-ship bunkering at the Senboku Terminal of Osaka Gas, and is then scheduled to sail for Australia.

The Verde Heraldo will sail under long-term transport contracts to supply raw materials for JFE Steel's mills, providing both reduced environmental impact and safe and reliable marine transport services.

About Verde Heraldo

LOA: 299.99 m
Breadth: 50.00 m
Draft: 18.436 m
Deadweight tonnage: 210,321 tonnes
Shipyards: Imabari Shipbuilding and Nihon Shipyard

Photo credit: Mitsui OSK Lines
Published: 22 April, 2025

Business

ENGINE: Adverse weather keeps bunker operations suspended in Zhoushan’s OPL area

Bunker deliveries at Zhoushan’s Tiaozhoumen and Xiazhimen outer anchorages have been suspended due to rough weather; some suppliers expect to fully resume operations in OPL area by 22 April.

Published

9 hours ago

April 22, 2025

Admin

Bunker deliveries at Zhoushan’s Tiaozhoumen and Xiazhimen outer anchorages have been suspended since Saturday due to rough weather, according to a source on Monday (21 April).

However, bunker operations have resumed this morning at Zhoushan’s more sheltered Xiushandong anchorage and the inner anchorage of Mazhi.

The port is currently experiencing strong wind gusts of 24–27 knots and swells approaching one meter.

Several suppliers expect to fully resume bunkering operations in the OPL area by tomorrow (22 April), the source said.

By Tuhin Roy

Photo credit: Manifold Times
Published: 22 April, 2025