MAERSK OIL LEASES S’PORE STORAGE SPACE
Move signals company’s push into Asian bunkering hub ahead of changes to global ship fuel standards, say sources
MAERSK Oil Trading has leased oil storage space in Singapore, signalling a push by one of the world’s biggest ship fuel buyers into the Asian bunkering hub ahead of changes to global fuel standards from 2020, said trade sources.
Maersk Oil has taken storage at the Tankstore oil terminal in Singapore, a spokesman for parent A.P. Moller-Maersk said, without giving further details.
The firm has leased 120,000 cubic metres of space for fuel oil for six months, said three trade sources with direct knowledge of the matter.
Maersk Oil is a major ship fuel supplier globally but has not had its own storage tanks in Singapore for the supply of marine fuels to its customers, which include A.P. Moller-Maersk, the world’s biggest container line.
The move comes ahead of the 2020 introduction of new rules on marine fuels that will limit the sulphur content to 0.5 per cent, from 3.5 per cent currently, to curb pollution.
Maersk announced in August a deal with Royal Vopak, an independent tank storage operator, to launch a 0.5 per cent sulphur fuel bunkering facility in Rotterdam.
The joint initiative will meet about 20 per cent of Maersk’s global demand for IMO 2020 compliant fuels “and we are looking into more bunkering facilities like this,” Niels-Henrik Lindegaard, head of Maersk Oil Trading, said last month.
The Singapore storage lease comes at a time of a steeply “backwardated” market structure, which has led several suppliers not to renew their fuel oil storage contracts in Singapore this year, said the sources.
Storing oil products is difficult in a “backwardated” market since prompt prices are higher than forward prices, making it difficult for traders to recover the costs of storage.
The Singapore Strait is one of the world’s busiest shipping superhighways, allowing Singapore to position itself as the world’s largest bunkering hub with more than 40,000 ships calling at the city-state for refuelling each year.