Singapore's Maritime and Port Authority (MPA) today enforced the mandatory use of mass flow meters (MFMs) for the delivery of distillates in the port.
"With effect from 1 July 2019, it is (…) mandatory to use [the] MPA-approved MFM system for all distillates bunker delivery," the MPA said in a circular released on 28 June.
The MPA defined distillates as fuels with viscosity ranging from 1-120 centistoke (cst) at 40°C, which includes marine gasoil (MGO), marine diesel oil (MDO), 0.1pc low-sulphur marine gasoil (LSMGO) as well as compliant 0.5pc ultra and very-low sulphur fuel oil. It also said it can suspend or revoke bunker licences of suppliers and operators who violate the new rules.
Gasoil prices on the spot market for early-July delivery varied widely last week, according to deal information sent to Argus by market participants. "The difference in prices between June and July deliveries is about $12-15/t," according to one gasoil supplier. Prices should start narrowing again this week as the market becomes used to the change. Suppliers acknowledged that premiums have indeed risen, but mostly to accommodate "non-operational returns".
Barging premiums have also shot up, especially for smaller quantities. Deliveries below 100 metric tonnes (t) now incur a $1,500 barging fee, while quantities below 50t command a $2,000 flat fee, according to market sources.
"This is highly inconvenient for us, as many of our vessels need only small quantities of gasoil," one buyer said. The mandatory use of MFMs for gasoil deliveries could mean that fewer smaller vessels will call in Singapore, although aggregate volumes are likely to remain intact. "Considering we normally charge $1,500 for fuel oil deliveries below 500t, we think the above barging fees are reasonable for gasoil," according to one supplier.
There is some lack of clarity as to how the new rules will impact the delivery of IMO-compliant low-sulphur fuel oil (LSFO), given that that fuel's viscosity ranges anywhere from 10-300cst.
Some vendors as well as the authorities are heard working on MFM certificates, which will show viscosity ranges. One approach is to calibrate MFMs for distillates ranging from 1-30cst and over 30cst for low- and high-sulphur fuels. Operators will need to upgrade the MFM software onboard their barges, which will likely incur a downtime of up to one week. "Barge operators would do well to use that downtime to clean out their tanks in order to start delivering LSFO, or else they face even more downtime later," said one buyer. Demand for LSFO in Singapore remains limited, as only buyers who need to set sail to China currently have an incentive to bunker these new fuels instead of LSMGO.
Singapore already made MFMs mandatory for fuel oil deliveries from 1 January 2017, becoming the first port in the world to do so. The city-state is the world's largest bunkering centre, with annual sales close to 50mn t in 2018.
