VTTI’s ATT Tanjung Bin has positioned itself to absorb the growing demand for fuel oil in Asia following an expansion of its facility in 2015
ATT Tanjung Bin capitalises on offering logistical assets for Asia’s biggest energy product, fuel oil, as well as being part of the world’s biggest market for excess fuel.
Situated in the heart of the FOB Straits, Asia’s most dynamic trading hub, the facility has expanded its operations further with an extra 260,000 m3 of capacity for fuel oil as well as constructing an additional berth.
In addition to handling greater volumes of vessels as a direct consequence of its expansion, the facility is also reaping the benefits of being part of Platts’ changed FOB Straits oil price assessment last year.
PLATTS PRICING BENEFITS
The new assessment came on the back of further storage expansion in nearby Johor and the Riau Islands and meant that the trading of products extended beyond Singapore’s traditional boundaries.
FOB Straits encompasses terminals beyond Singapore’s borders and means that bids can be met from any approved terminal, whether in Singapore or Malaysia, while similarly sellers could nominate any such terminal for an FOB Straits offer.
As a result, the previous two-tier market that operated in the region has been dissolved and has left a more level playing field according to ATB’s general manager Aernout Boot.
He says: ‘We used to be a Platts approved location but since July 2015 when the FOB Straits benchmark was launched anyone in the Singapore region is treated equally. It is now a much more level playing field and as a result we see much more Platts deliveries from our location.
‘We are part of the Singapore market. As we are only ten nautical miles from Singapore we should be seen in the context of the Singapore trading hub. We see a lot of traffic to and from our facility to the pelepas anchorage as well as to refineries and terminals located on Jurong Island.’
The first phase of the terminal was commissioned in April 2012 with 893,000 m3 of capacity spread over 41 tanks and five berths with a draft of 17.5 meters. It can handle petrol, jet fuel, gasoil, fuel oil and biofuels. The operator has focused on expanding their fuel oil storage capabilities as it remains the biggest market in Singapore thanks to the region being the world’s largest bunkering hub. Asia is also known to be the biggest outlet for excess fuel in the market.
Since the expansion the facility now handles approximately 130 vessels per month, which is partly attributable to new customers as a result of the project.
The facility also benefits from favourable port tariffs as well as available land for potential growth.
Executives are now examining where they can further optimise their market offering and add further value to their business. However, Boot says that they will approach any future plans with caution.
‘We have a strong track record so it would be easy for us to expand further, but there will need to be a market justification for it and it needs to go hand in hand with additional jetty capacity.’
Despite the global petroleum products market being oversupplied, Boot counters that whilst demand growth has slowed in some places, it has not declined and that underlying physical demand will still grow.
‘The tankage market is quite balanced at the moment despite the fact that there has been a lot of additional capacity over the last few years,’ Boot says.
‘The market can absorb this and as such there are no empty tanks. People are not being driven to build and lease tanks elsewhere outside of the Straits hub.
‘Demand for petroleum products is the main driving force of our business. The higher the underlying demand, the more need for logistical facilities to handle all the arbitrage flows.
‘Demand for oil in Asia is expected to grow over the next 10 years, which means there should be healthy demand for tanks. Although there is an oversupply of products, the underlying demand is still growing, which means a continued requirement for logistical assets.
‘The demand for products in India, Indonesia and China is still growing, despite the slowdown in growth in China, and the Singapore hub will continue to cater to these demand centers.’