Business

USD $1.49 million bunker credit sleeving dispute between Goodwood and Southernpec reaches conclusion

Universal Alliance, BMS United, Digiland International, Goodwood Associates, Southernpec (Singapore), and Taigu Energy were involved in alleged circular fictitious trades of fuel oil during July 2015.

Published

4 years ago

November 24, 2020

Admin

A High Court of the Republic of Singapore Judge on 5 November issued a reserved judgement over a bunker credit sleeving dispute between Goodwood Associates Pte Ltd (Goodwood), Southernpec (Singapore) Pte Ltd (SPPL), Southernpec (Singapore) Shipping Pte Ltd (SPSPL) and other individuals, according to a court document seen by Singapore bunker publication Manifold Times.

Summary

Singapore-based petrochemical wholesale company Goodwood was involved in a credit sleeve operation with several parties in July 2015, where it received a margin of USD 3 per metric tonne (mt) for its intermediary role to facilitate the sales of fuel oil between BMS United Bunkers (Asia) Pte Ltd (BMS) and SPPL.

Source: High Court of the Republic of Singapore

The transactions for 2,000 metric tonnes (mt) and 1,200 mt of fuel oil were supported by intertank transfer (ITT) certificates and cargo release notices (CRNs).

The Scheme was intended to comprise a circular chain of “back-to-back sales” of non-existent “fuel oil” from one entity in the chain to another lower down the chain, wrote Justice Hoo Sheau Peng.

To start the chain, BMS would provide actual funds to Universal Alliance Limited (UA), another oil trading company, which would then use the funds to make payment to the next fictitious “sub-seller” above it in the chain for an ostensible purchase of fictitious fuel oil, until the funds found their way back to BMS.

According to the view of SPPL’s Fuel Oil Trading Manager Jason Wu Jian Cai (Mr Wu), another motive of the circular fictitious “paper” deals in fuel oil was purportedly to help improve Goodwood’s revenue figures.

“Mr Wu brought the matter up to Mr Xu, who agreed to do so. This was because Mr Xu and Mr Wu had enjoyed a good working relationship with Mr Lee, Mr Lim and Dr Goh Jin Han (Dr Goh), the director and chief executive officer of Digiland, when the latter three were involved with another oil trading company IAG-Pacific Petroleum Pte Ltd.,” stated the court document, reflecting Mr Wu’s account of the alleged operation.

“To that end, Mr Lim came up with a scheme involving a circular series of fictitious trades (the Scheme) with BMS on board. In particular, Mr Lim introduced Mr Mohammad Arif bin Abdol Rahman (Mr Arif), a BMS bunker oil trader, who, according to Mr Wu, would “handle day-to-day running of the Scheme for BMS” with the blessing of his superior, Mr George Markos Kounalakis (Mr Kounalakis), the managing director of BMS.”

Dispute

Issues arose for the July contracts when UA defaulted on its payment to Taigu, which in turn did not pay SPPL; leading to SPPL’s default on its payment obligations to Goodwood.

As such, Goodwood launched a claim against purchaser SPPL for the two July fuel oil sales contracts; it is also claiming against SPSPL which is the guarantor of SPPL for the similar sales contracts.

Goodwood’s case was it had duly performed its obligations under the July Contracts as it relied on the ITT certificates and CRNs as supporting evidence for the transaction.

In response, both SPPL and SPSPL denied liability and claimed the two fuel oil sales contracts were shams; they issued a counterclaim against Goodwood and its associates on the grounds they were making legal claims on the false premise that the July Contracts were genuine.

Southernpec asserts the July Contracts are not enforceable due to them being “sham transactions supported by sham documents” and thus not being subjected to any legal effects.

SPSPL on November 2017 further introduced counterclaims against Goodwood and its associates for lawful and unlawful means conspiracy.

Goodwood on October 2018 started a counterclaim against SPPL for the purchase price based on the July Contracts.

Conclusion

In summary, Justice Hoo concluded the July contracts were not shams and dismissed SPPL’s and SPSPL’s claims based on the tort of conspiracy to injure and decided both were liable to Goodwood under the July Contracts and the SPSPL Guarantee respectively.

“Judgment is granted to Goodwood against SPPL and SPSPL in the sum of US$1,491,669.26 for the invoiced amounts under the July Contracts,” she stated.

“Contractual interest is awarded at the rate of 5.1885% per annum on US$932,177.08 from 30 July 2015 to the date of payment, and at the rate of 5.19075% per annum on US$559,492.18 from 4 August 2015 to the date of payment.”

Note: Full details of the 73-page judgement, including names of all staff involved and further details of the alleged credit sleeving operations, can be found on the original document available from the High Court website here.

Photo credit: Manifold Times
Published: 24 November, 2020

Winding up

Singapore: Annual general meeting set for Xihe Holdings subsidiary

Annual general meetings will be held on 23 September for Nan Chiau Maritime to receive an update on firm’s liquidation, according to Government Gazette notice.

Published

16 hours ago

September 10, 2024

Admin

A notice was published on the Government Gazette on Monday (10 September) regarding the annual general meetings to be held on 23 September for Xihe Holdings subsidiary Nan Chiau Maritime Pte Ltd.

Annual general meetings for Nan Chiau Maritime are to be held at the following times:

For the company: 2pm
For the creditors: 3pm

The agenda for all the meetings are:

To receive an update on the liquidation.
To receive an account of the Liquidators’ acts and dealings, and of the conduct of the winding up.

The following are the details of the liquidator:

Ho May Kee
Liquidator
c/o 8 Marina View
#40-04/05 Asia Square Tower 1
Singapore 018960

Xihe Holdings Pte Ltd and its subsidiaries are owned by the Lim family, who are also the owners of the embattled Hin Leong Trading.

Manifold Times previously reported several resolutions for the firm were passed by written means, including winding-up the company.

Manifold Times also reported directors of Nan Chiau Maritime declaring the company’s inability to continue business.

Photo credit: Jo_Johnston from Pixabay
Published: 10 September, 2024

Methanol

Methanex to acquire OCI Global international methanol business

Transaction includes OCI’s interest in two methanol facilities in Beaumont, Texas, a low-carbon methanol production and marketing business and a currently idled methanol facility in Netherlands.

Published

16 hours ago

September 10, 2024

Admin

Methanex to acquire OCI Global international methanol business

Methanex Corporation (Methanex) on Sunday (8 September) announced that it has entered into a definitive agreement to acquire OCI Global’s (OCI) international methanol business for USD 2.05 billion.

The transaction includes OCI’s interest in two world-scale methanol facilities in Beaumont, Texas, one of which also produces ammonia. The transaction also includes a low-carbon methanol production and marketing business and a currently idled methanol facility in the Netherlands.

“This is a unique opportunity to create value by acquiring two highly attractive North American methanol assets that will further strengthen our global production base and we expect it will be immediately accretive to free cash flow per share,” said Rich Sumner, President and Chief Executive Officer of Methanex.

“The Beaumont plants benefit from access to North America’s abundant and favourably-priced supply of natural gas feedstock, and are expected to increase our global methanol production by over 20 percent.”

“We believe the transaction will provide significant long-term value to Methanex shareholders while aligning with our strategic objectives of industry leadership, operational excellence, and financial resiliency,” said Mr. Sumner.

“From an operating perspective, we have a shared culture of safety and operational excellence, and we expect the OCI team will help us build new skills in ammonia while enhancing our capabilities in the evolving business of low carbon methanol production and marketing.”

Nassef Sawiris, Executive Chairman of OCI, added, “We are pleased with the opportunity to achieve a significant ownership position and are highly confident in Methanex’s ability to create enduring value for shareholders. As the global leader committed to safety and operational excellence, we identified Methanex as the natural owner of OCI Methanol at the outset of our strategic process, which we initiated in the spring of 2023.”

As part of the transaction, Methanex will acquire the following:

A methanol facility in Beaumont, Texas with an annual production capacity of 910,000 tonnes of methanol and 340,000 tonnes of ammonia. This plant was restarted in 2011 and since that time the plant has been upgraded with USD 800 million of capital for full site refurbishment and debottlenecking.
A 50 percent interest in a second methanol facility also in Beaumont, Texas, operated by the joint venture Natgasoline LLC (Natgasoline). The Natgasoline plant was commissioned in 2018 and has an annual capacity of 1.7 million tonnes of methanol, of which Methanex’s share will be 850,000 tonnes.
OCI HyFuels, which produces low-carbon methanol and sells industry-leading volumes with trading and distribution capabilities for renewable natural gas (RNG). With nine years of experience in the low-carbon methanol business and with an array of blue-chip customers, this will enhance Methanex’s existing Low Carbon Solutions function with additional expertise in this developing segment.
A methanol facility in Delfzijl, Netherlands with an annual capacity to produce 1 million tonnes of methanol. This facility is not currently in production due to unfavourable pricing for natural gas feedstock.

Closing of the transaction is expected in the first half of 2025. The transaction has been approved by the boards of directors of both companies and is subject to receipt of certain regulatory approvals and other closing conditions including TSX approval for the issuance of Methanex shares to OCI.

The transaction is also subject to approval by a simple majority of the shareholders of OCI. The largest shareholder of OCI, has signed an agreement to vote for the transaction.

Photo credit: OCI Global
Published: 10 September, 2024

Alternative Fuels

Corvus Energy gas-safe marine fuel cell system receives type approval by DNV

Firm said the system is the first Fuel Cell System designed to be inherently gas-safe, making it the safest fuel cell system in the market.

Published

16 hours ago

September 10, 2024

Admin

Corvus Energy gas-safe marine fuel cell system receives type approval by DNV

Corvus Energy, supplier of energy storage systems (ESS) for maritime applications, on Wednesday (4 September) announced that the Corvus Pelican Fuel Cell System has received Type Approval from classification society DNV.

The system, which was developed through the three-year-long H2NOR project, is the first Fuel Cell System (FCS) designed to be inherently gas-safe, making it the safest fuel cell system in the market.

Corvus Energy said receiving type approval from DNV confirmed that the Corvus Pelican Fuel Cell System meets the most stringent performance and safety standards required by the maritime industry.

Olaf Drews, Head of Engines & Pressurized Equipment Maritime, said: “It is a special fuel cell system, because the Pelican uses nitrogen for inerting of the fuel cell space.”

“It is the first fuel cell system that uses this technology and this brings it to a very preferred safety level. This is a milestone, and we look forward to the first ship project.”

Despite technology improvements and advancements in battery electric vessels, most vessels cannot achieve zero-emission operations for extended periods of time using batteries alone. For vessels on longer routes and vessels that are unable to charge often enough, we need to add clean fuel and fuel cells to enable extended zero-emission capabilities.

CEO of Corvus Energy, Fredrik Witte, said: “Toyota’s unsurpassed knowledge in developing high-quality and efficient fuel cells, in addition to the strong collaboration and high level of maritime experience among the partners in this development project, has been key.”

“This is a milestone for net zero shipping. We now have a high-quality range extender to add to our existing ESS portfolio with the scalability and the safety needed to be a real driver in the future of marine decarbonization.”

The first Corvus Pelican Fuel Cell System is produced and ready to be installed onboard MS Skulebas, a 35-meter fishing and training vessel owned by Vestland County and operated by Måløy Upper Secondary School in Norway.

The vessel already has a 1 MWh battery system onboard. By adding the Corvus Pelican Fuel Cell System and hydrogen storage, the vessel will be able to operate for four days on zero emission.

Photo credit: Corvus Energy
Published: 10 September, 2024