THE bankruptcy of the world's leading marine fuel supplier, OW Bunker, amid charges of fraud, has shaken up the world's biggest bunker market in Singapore, reports Reuters.
The immediate effect in Singapore's US$25 billion marine fuel market, is having big companies get bigger and small companies get smaller because of a severe credit squeeze.
This comes in the wake of OW Bunker filing for bankruptcy in Denmark last week after revealing losses of $125 million at its Singapore unit Dynamic Oil Trading, prompting banks to refuse credit.
Majors, like BP, Shell and independents Glencore, Vitol and Hin Leong with strong credit lines, stand to increase market share while small companies are vulnerable to being snuffed out.
"Credit is so tight, only the big boys will survive" said independent energy consultant Ong Eng Tong.
Creditors have launched legal actions in Singapore to reclaim debts, while fear of counterparty exposure have bunker premiums hitting two-year highs.
Fuel oil sellers are demanding payment guarantees for oil sold to bunker companies, while the cost to insure such deals is expected to climb.
Because of this, shipowners are also heading to other ports, with Hong Kong sellers getting up to 20 per cent more inquiries, but the Maritime and Port Authority of Singapore (MPA) said there was no disruption to bunker supply in the port.
Because of the sheer size of Singapore's bunker fuel market, with close to 43 million tonnes of oil sold last year, there are more companies supplying ship fuel than the 63 bunker fuel companies licensed by MPA.
Smaller players act as retailers, borrowing credit lines and bunker delivery notes from big companies that act as middlemen for a fee, and using the credit buy fuel oil for delivery to shipowners in a process known as "sleeving".
WORLD SHIPPING
18 November 2014 - 21:27
OW Bunker bankrupty shakes up Singapore world's biggest ship fuel market
THE bankruptcy of the world's leading marine fuel supplier, OW Bunker, amid charges of fraud, has shaken up the world's biggest bunker market in Singapore, reports Reuters.
WORLD SHIPPING
18 November 2014 - 21:27
OW Bunker bankrupty shakes up Singapore world's biggest ship fuel market
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