Singapore oil trade declines after 10 years

Singapore oil trade declines after 10 years

SINGAPORE (AFP): Singapore's physical oil trade, led by a
sharp fall in product exports, is headed for its first year-on-
year decline after 10 years of strong growth, a leading oil
journal forecast yesterday.

Preliminary figures show exports in the six months to June
fell nearly six percent from a year earlier to 924,444 barrels
per day (bpd) as Singapore lost market share to regional and
western rivals, the Singapore Oil Report said.

Exports were unlikely to recover strongly enough for the rest
of the year to offset the decline, the publication predicted in
its upcoming edition, excerpts from which were released to AFP.

An expansion of refining capacity in the region, a sharp rise
in product flows from the West to Asia, reduced domestic
throughput on weak margins and the decline of the Chinese market
following import clampdowns dented Singapore's exports.

South Korea, Indonesia, Malaysia, Thailand, Japan and the
Philippines have expanded refining capacity by more than 900,000
bpd since 1994 and are expected to add another two million bpd
over the next two years.

The expansion has reduced the region's dependence on
Singapore, the world's third largest oil trading center after New
York and London, with physical trade totaling US$55 billion last
year. It is also the world's third largest refining center after
Rotterdam and Houston.

Refiners have been under pressure with profits shaved to about
$2 a barrel compared with $4 a barrel a few years ago when
refining capacity was overwhelmed by booming Asian oil demand.

In the three months to March, Singapore's cargo trade reached
more than 2.45 million bpd of products and crude imported and
exported, a 4.6-percent rise over the corresponding period of
1994.

Rise

But the rise was more than offset by a second-quarter slump
that resulted in trade volume falling by about 2.5 percent in the
first half, the report said.

Product exports plunged more than eight percent in the three
months to June from 1.03 million bpd in the previous
corresponding quarter, most of the losses resulting from import
cutbacks by large buyers such as Malaysia, China, Hong Kong and
Thailand.

The buyers either expanded domestic output or bought directly
from suppliers. China led the cutbacks by reducing intake from
Singapore by more than 65,000 bpd to 60,000 bpd, the report said.

Diesel exports were hardest hit in April-June, falling by more
than 12 percent to 326,000 bpd on reduced intake by main
customers such as Hong Kong, China, Malaysia and Thailand, the
journal said.

"Singapore's diesel has been displaced not only by higher
domestic output in the key markets, but also supplies from the
West," it said.

Gasoline sales were hurt by import cutbacks that reversed a
14.4-percent rise in January-March with a 17-percent decline in
the following three months, while naphtha sales were down 5.4
percent for the first half.

The slowdown and diversion of trade away from the island state
were also reflected by independent storage tank companies which
saw utilization rates fall to between 50 percent and 60 percent,
the lowest in a decade, the oil report said.

Despite the worries, traders were confident of Singapore's
future in the physical oil business, noting the concentration of
refineries, efficient port services, infrastructure and a
strategic location unrivaled in Asia, it said.

Emerging economies such as Vietnam and Bangladesh were
stepping up purchases from Singapore and could soon be followed
by Cambodia and Burma, the report said, while the region's oil
demand will eventually outpace its refining capacity.