Accumulation of low-sulphur marine fuels held in floating storage around the Singapore trading and pricing hub are steadily growing ahead of a 2020, reports Reuters.
New Fuel Regulation
The global deadline for rules that have shaken global oil refining and shipping industries, have led to stockpiling of LSFO in floating storages.
According to Kpler, a total of 32 ships, mostly supertankers capable of carrying 300,000 tonnes or more of oil, are currently anchored in Malaysian waters near Singapore accumulating stores of IMO-compliant fuels on board on Thursday.
Kpler estimates total fuel oil floating storage at 5.765 million tonnes and a total 4.455 million tonnes of compliant fuel oil in floating storage.
Industry in full action to comply
A mandate by the International Maritime Organization requires ships globally to reduce the sulphur content in their bunker fuel to 0.5% starting January 2020 from the current 3.5%, stirring up the global bunkering industry that consumes some 4 million barrels per day.
To comply, most ships are widely expected to switch to burning low-sulphur fuel oil (LSFO) or to more expensive marine gasoil.
Scrubber option to the rescue
Shipownes can also install costly exhaust gas cleaning kits called “scrubbers” that allows them to continue burning cheaper high-sulphur fuels.
Fuel Inventories around Singapore
To meet the growing demand for LSFO, traders and suppliers are building inventories of the fuel around Singapore which is by far the world’s largest bunkering hub.
Earlier in the month, LSFO floating storage was estimated at 4 million tonnes on board 18 very large crude carriers (VLCCs) around Singapore, according to an analytics firm, up around 14% from industry estimates for IMO-compliant LSFO and components being held in tankers in July.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!