Maersk Oil Trading-one of the world's top ship fuel buyers-has hired an oil storage facility in Singapore to provide fuel to customers in Asia ahead of the new ship fuel regulations, Reuters reported on Wednesday, quoting trade sources.
The International Maritime Organization (IMO) has set January 1, 2020, as the starting date from which only low-sulfur fuel oil will be allowed to be used for ships. Shippers are exploring various options to comply with the new sulfur-limiting rules-one is to use Ultra Low Sulfur Fuel Oil (ULSFO) or marine gas oil (MGO), while another option is to install scrubbers-systems that remove sulfur from exhaust gas emitted by bunkers.
Maersk Oil Trading hasn't had its own storage facilities in the world's largest bunkering hub Singapore, which lies on one of the busiest waterways in the world.
According to Reuters sources, Maersk Oil Trading has leased storage for fuel oil for six months in a move when the market is in steep backwardation-the market situation in which front-month prices are trading at a premium compared to prices further out in the future, which makes storing oil and products uneconomical to recover storage costs.
Maersk Oil Trading has leased storage at the Tankstore oil terminal in Singapore, a spokesman for its parent company, the world's top container line, A.P. Moller-Maersk, told Reuters, without elaborating on details.
In August this year, A.P. Moller-Maersk and independent tank storage operator Royal Vopak announced an agreement on a sulfur fuel bunkering facility in Rotterdam, the Netherlands, which will meet around 20 percent of A.P. Moller-Maersk's total low-sulfur fuel requirements.
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Last month, the head of Maersk Oil Trading, Niels-Henrik Lindegaard, told Reuters that Maersk would invest in new scrubber technology on a limited number of vessels.
"Using scrubber technology is a small part of - and just one of several elements in - our overall 2020 fuel sourcing strategy to ensure compliance in time," he said.
"While we will continue to explore how to best comply with the 2020 sulphur cap, we still believe the best solution remains with compliant fuels from refineries on land," Lindegaard told Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More