Bunkers

Lessons learned for the future

It has been a volatile year at the world’s largest bunkering hub

It’s been a tough year for Singapore’s bunkering industry, yet ultimately one where being proactive ought to be praised.

The world’s largest bunkering hub has had to fight extreme price volatility as well as one of the worst off-spec scandals in more than a decade.

Bunker prices entered record territory for much of the year, and the price gap between high and low sulphur oil - often referred to as the Hi5 - was widest in Singapore, due to very tight availability of VLSFO, something that saw ships swerve past the republic for supplies this summer.

It was not just high prices owners had to contend with when coming to fuel up in Singapore. In March, Splash broke the story of a sprawling contaminated bunker scandal, which ultimately affected 200 ships, with the subsequent legal battles likely to run for years. However, the swiftness with which authorities dealt with the issue was remarkable.

Chlorinated compounds were found in many samples of fuel sold by Glencore and PetroChina, resulting in damage to fuel injection pumps, injectors, filter elements and purifier systems with many ships breaking down.

Fuel tester VPS quickly recommended gas chromatography mass spectrometry (GCMS) screening as the most effective method of detecting chemical contaminants in bunker fuel including chlorinated hydrocarbons.

Jonathan Arneault, co-founder of another bunker checker, FuelTrust, compared the fuel scandal in Singapore to the one in Houston in 2018.

“Four years later, the lawsuits from Houston are still ongoing, and we’re just realising the financial impact that a single batch of bad fuel can have on the industry,” Arneault said.

Dr Ram Vis, a bunkering expert and owner of Viswa Labs, echoed the VPS call to use technology to better document and analyse risk in the supply chain.

“The bunker quality problems give a feeling of déjà vu from an organic chlorides contamination in 2001, and more recently what we saw in Houston four years ago,” Vis said.

In August the Maritime and Port Authority of Singapore (MPA) decided to suspend Glencore’s bunker licence for two months after a fuel contamination probe had been carried out.

MPA’s investigation found that despite records between March 21 and 23 showing high concentration levels of chlorinated organic compounds in fuel Glencore purchased, it continued to supply contaminated bunkers to vessels in the Singapore port from March 22 to April 1.

Glencore also sold the fuel to Petrochina for further trade in Singapore, but no action was taken by the MPA as PetroChina promptly stopped delivery of the contaminated fuel by March 19, once it received its own test results showing that the fuel it supplied was contaminated.

The MPA ultimately laid the blame for the contamination outbreak on suppliers from the Middle East.

The fuel was traced back by the MPA to fuel purchased by Glencore in January and February this year. Glencore had

purchased the fuel through Singaporebased Straits Pinnacle, which had contracted its supply from Unicious Energy. The contaminated HSFO was loaded at the Port of Khorfakkan in the United Arab Emirates (UAE) onto a tanker and shipped to floating storage facilities in Tanjung Pelepas, Malaysia to be further blended. The blended HSFO was subsequently delivered to storage facilities in Singapore.

Singapore’s swift, comprehensive action in the wake of the scandal breaking drew praise, as has its commitment to use mass flow meters

to ensure the right volumes of fuel are actually delivered - a piece of technology very few other bunkering hubs have engaged with.

“Despite the bunkering industry’s scale and the essential role it plays in supporting global maritime trade, much of it is still steeped in old-fashioned, outmoded operational practices. There is a continuing lack of transparency in the way marine fuel is delivered. This has to change,” argued Kenneth Dam, global head of bunkering at TFG Marine, in a post on the company’s website this summer. TFG Marine is a joint venture between Trafigura and John Fredriksen founded two years ago. Dam urged other leading bunkering hubs to follow the lead of Singapore and get mass flow meters installed as soon as possible.

A recent Blue Insight study assessed

There is a continuing lack of transparency in the way marine fuel is delivered

bunker deliveries at Rotterdam and Fujairah, the world’s second and third largest bunkering ports. It concluded that reported VLSFO bunker volumes at these two locations resulted in $250m in operating losses for suppliers across 2021 with bunker buyers being severely short-changed on volumes. TFG Marine, which wants mass flow

metes to be made mandatory globally, has joined with 50 other industry participants representing 2,000 vessels to appeal to the Rotterdam and the Antwerp port authorities to follow Singapore’s lead and introduce mandatory mass flow meter delivery in their jurisdictions.

Alternate fuels

AS BEFITS THE world’s largest bunkering hub, plenty of trials are underway across Singapore to identify what fuels the city-state will be selling in the future.

Singapore’s Global Centre for Maritime Decarbonisation (GCMD) is leading a consortium of 18 industry partners to launch a drop-in biofuels pilot project with a combined contribution of $18m in cash and

in-kind to establish an assurance framework for ensuring the supply chain integrity of current and future green marine fuels.

Meanwhile, some of the largest names in shipping including Maersk and Kawasaki Kisen Kaisha (K Line) are part of a growing consortium which has set out to develop an ammonia bunker supply chain in Singapore. The group launched a feasibility study last year to identify potential ammonia supply sources and indicative costs, as well as undertaking the preliminary design and cost estimation for critical infrastructure, such as ammonia storage tanks and bunkering vessels.

Now plans are well underway to build an ammonia bunker vessel to ensure this new ship fuel type is available at the port by the end of the decade.

Others have also moved to establish ammonia bunkering in Singapore. Last May, the Japanese trading house Itochu teamed up with Itochu Enex, Vopak Terminals Singapore, Pavilion Energy Singapore, Mitsui OSK Lines (MOL) and Total Marine Fuels for a joint development study.

Southeast Asian shipbuilder PaxOcean Engineering has signed a memorandum of understanding (MOU) with Singapore-based bunker vessel operator Hong Lam Marine and classification society Bureau Veritas to jointly develop an ammonia bunker vessel design.

Finally, in this new fuels roundup six companies, including Danish carrier Maersk, have formed a partnership that aims to establish Asia’s first green e-methanol plant which converts captured biogenic carbon dioxide (CO2) into green e-methanol. The pilot plant will be set up in Singapore pending successful conclusion of feasibility studies by the end of 2022 and forms another part of the global fuelling jigsaw for Maersk’s raft of methanol-fuelled boxships under construction in Asia.