Singapore will continue to be the world’s largest ship refueling destination going into 2020 and beyond, Maersk regional trading head Peter Beekhuis said Friday at the S&P Global Platts Asian Refining Summit in Singapore.
“The efficiency, transparency and the infrastructural advantage will hold Singapore in good stead,” Beekhuis said in response to an apparent concern that the city-state may likely lose its dominant position to other bunkering destinations, especially China, within this region, in a low sulfur emissions world.
The International Maritime Organization’s 2020 global sulfur cap rule, hailed as one of the most significant changes for the shipping industry, starts January 1, 2020. It requires shipowners worldwide to burn marine fuel with maximum 0.5% sulfur content, as compared to a maximum of 3.5% currently.
With an expectation that a fair share of marine fuels would originate from the distillate part of the barrel going into 2020, there has been some speculation that countries long middle distillates would be at an advantage to cater to this potential demand.
“Singapore imports about 80% of fuel oil to meet its current bunkering demand. Going into 2020, this may rise to 85% or 90% or perhaps even more, but the country’s status as a trading hub will not change,” Beekhuis said. “Some volume may shift within the region, but not [enough] to displace Singapore’s status as the top bunkering hub,” he added.
“When Singapore made it mandatory for fuel oil deliveries to be made using mass flow meters at the start of 2017, there were some concerns that demand will shift away, but if you look at what happened in terms of volume, it just shows that shipowners liked it,” Beekhuis said.
Singapore’s 2017 bunker demand rose 4.2% year on year to a record 50.6 million mt. Annual vessel arrival tonnage increased 5.1% to 2.8 billion gross tons. The maritime industry contributes 7% of Singapore’s GDP and employs over 170,000 people.
Maersk Oil Trading helps meet about 12 million mt/year of A.P. Moller Group’s bunker demand worldwide. It trades about 200,000 mt/month of bunker fuel between Singapore and Tanjung Pelapas.