Singapore bunker rules hit independent suppliers

Singapore bunker rules hit independent suppliers

SINGAPORE (Reuter): The Singapore port began to finetune its
ship refueling procedure yesterday, but smaller bunker fuel
suppliers said they feared stricter rules would force them out of
business.

While shipowners largely welcomed the revisions and tighter
rules to the Singapore Bunkering Procedure, bunker suppliers were
adopting a wait-and-see attitude.

"The normal malpractices cannot be continued among Singapore's
smaller bunker suppliers," a Hong Kong-based bunker trader told
Reuters. "Some would either have to change their business style
or close shop."

Bunker suppliers will now have to provide bunker fuel which
meets or exceeds specifications in the latest edition of the ISO
(International Organization for Standardization) 8217, unless the
buyer agrees to a different quality.

Singapore is the world's top refueling port, supplying 17.6
million tons of bunker fuel in 1994, the Port of Singapore
Authority (PSA) said.

With keen competition from regional ports, particularly in
South Korea and the Middle East, Singapore has been hard-pressed
to improve its services. The task has been made even tougher by
disputes over the quality and quantity of bunker fuel delivered
from its port.

Some industry sources said the problem arose largely from many
independent suppliers accused by shipowners in the past of
delivering less than the purchased amount or inferior quality
fuel.

The PSA said the number of disputed has fallen since the
bunkering procedure was implemented in August 1992. But loopholes
still exist and needed to be plugged.

Procedure

"The procedure is basically the same, PSA is just finetuning
it," said a bunker procuring manager with a major shipping line.
"It will take maybe six months for people to get used to it."

Bunker suppliers said the most crucial revision was the need
to maintain a stock movement report or a logbook.

"PSA will now know how much oil we buy, how much oil we sell
and how much we have in the balance", a supplier said. "We have
to submit the logbook. Before we did not need to.

"PSA will also do spot checks on our barges to see if it
tallies with what's in the book," the supplier said, adding that
some suppliers would find it difficult to sustain their
businesses.

In Singapore, major oil producers and refiners traditionally
sell fuel to independent bunker suppliers at higher prices than
that sold directly to shipowners to cut out business to
independents.

But some independents were able to survive through creative
means, such as buying back bunker at lower prices or delivering
inferior quality fuel.

Some independents have already pushed prices higher in
reaction to the new rules as they can no longer circumvent the
higher wholesale costs as they did before.

"Now, the only margins we can make is from the barging cost,"
one supplier said. "But who will buy at such high prices?"