Marine fuel floating storage builds in Asia ahead of new rules

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    A file photo of view of a VLCC supertanker in the waters off Jurong Island in Singapore. (Reuters Photo)
    A file photo of view of a VLCC supertanker in the waters off Jurong Island in Singapore. (Reuters Photo)

    SINGAPORE- Stockpiles of low-sulphur marine fuels held in floating storage around the Singapore trading and pricing hub are steadily growing ahead of a 2020 global deadline for rules that have shaken the global oil refining and shipping industries.

    A total of 32 ships, mostly supertankers capable of carrying 300,000 tons or more of oil, are currently anchored in Malaysian waters near Singapore accumulating stores of IMO-compliant fuels on board, according to data released by intelligence firm Kpler on Thursday.

    Kpler estimates total fuel oil floating storage at 5.765 million tons and a total 4.455 million tons of compliant fuel oil in floating storage.
    Other researchers say the total may be even higher.

    Analysts at Refinitiv in Singapore said on Friday there were about 7.3-7.5 million tons of LSFO (low-sulphur fuel oil ) and related blendstocks in floating storage around the Singapore hub onboard 29 supertankers.

    This is higher than the 7 million tons of LSFO volumes in floating storage Refinitiv analysts tracked at the beginning of the month.

    A mandate by the International Maritime Organization requires ships globally to reduce the sulphur content in their bunker fuel to 0.5 percent from January from the current 3.5 percent, shaking up the global bunkering industry that consumes some 4 million barrels per day.

    To comply, most ships are widely expected to switch to burning LSFO or to more expensive marine gasoil. Shipowners can also install costly exhaust gas cleaning kits called “scrubbers” that allows them to continue burning cheaper high-sulphur fuels.

    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. – Reuters