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Singapore To Offer LNG Bunkering From 2015

by Mary Swire, Tax-News.com, Hong Kong

24 October 2012


The Maritime and Port Authority (MPA) of Singapore is to launch a number of initiatives in support of the territory's world-leading bunkering industry, which is being heavily impacted by the depressed market conditions faced by shipowners, and is having to adapt to meet new fuel-efficiency requirements.

Speaking at the Singapore's 17th annual International Bunkering Conference and Exhibition, Singapore's Minister for Transport, Lui Tuck Yew said that higher bunker prices are now accounting for over 50% of vessels' operating costs, and shipping lines are being forced to closely manage their overheads. He noted that with shipping lines adopting slow steaming to cut costs and manage the oversupply in capacity, bunker suppliers are too finding their bottom lines affected.

Despite the weak market conditions, bunker sales in Singapore have continued to grow. In 2011, Singapore's bunker sales grew 5.6% to reach a record 43.2 million tonnes. In the first nine months of this year, the Port of Singapore sold a total of almost 32.3 million tonnes of bunkers, a marginal increase from the same period in 2011, the MPA reported.

"Going forward, the industry will have to contend with several key fuel-related issues. First, we have to contend with Emission Control Area regulations and new sulphur content rules. Second, there is a need to prepare adequately for the technical challenge of fuel switching. This requires well-trained crews, stringent operating procedures and properly configured fuel systems. Failure to do so entail operational risks like propulsion incidents in confined waters, unplanned downtime and engine damage. Third, given the new content rules, the industry will need, for example, to look more closely at Liquefied Natural Gas, or LNG, distillates and abatement technologies. With all three, as is the case with other possibilities, we need to think carefully about cost-related issues, supply network and infrastructure including onboard retrofitting."

"Against this backdrop, it is fitting that the theme for this year's SIBCON is 'Achieving Sustainable Solutions for Marine Fuels'. I understand that the conference will take a close look at developing marine fuels that can promote cost-effective growth while minimizing the environmental impact, in particular, the use of alternative fuels such as LNG and how this can be supplied and regulated."

On the matter, the MPA announced that it would soon be drafting requirements that bunker companies would have to adhere to to begin providing LNG. The MPA said that operators would be invited to merge operations in this area and jointly apply for a single bunker license for the provision of LNG. Supply in Singapore would begin in 2015, the MPA said. In addition, construction is under way to build an LNG receiving terminal at Jurong Island, Singapore, which is expected to be operational in 2013.

This year bunker operators have faced their most challenging conditions in recent times. A total of seven suppliers were confirmed to have surrendered their licenses due to financial difficulties, up from one last year. Bunker providers have said that they are facing non-payment from a number of companies, and the number of arrests of ship operators has risen markedly this year.

To support the industry, the MPA is to establish a hotline to mediate in financial disputes between suppliers and their clients, which is expected to be in place by November 1. Meanwhile, the MPA is to release a biannual information sheet, to improve transparency in relation to the financial and technical performance of bunker suppliers.

"For Singapore to maintain its position as the world's premier location for bunkering, it is imperative that the government and industry work together to ensure both the quality and quantity of fuel delivered in our port," Tuck Yew said.

TAGS: marine

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