Singapore hosts the world's largest ship refuelling port handling bunker fuel and oil blending products
Singapore's fuel oil market, a prime driver of world prices, has experienced a near doubling in storage capacity.
With approximately 150 firms in Singapore supplying bunker fuel to the world's largest ship refuelling port or oil blending products for resale to China and elsewhere in East Asia, the region's fuel oil industry has monthly sales of $20-30 billion (12.7-19 billion).
Bunker fuel demand has grown 8% a year for the past five years as China's rise as manufacturing hub coupled with Singapore's low prices en route to Europe have boosted productivity.
Last year's sales reached approximately 2.6 million tonnes a month, equivalent to more than 60% of Singapore's fuel oil trade. Chinese refineries are also producing more fuel oil as they expand capacity and shift toward a heavier crude slate. Refiners will supply an additional 400,000 barrels a day of oil products this year, more than double last year's growth.
Investment bank Morgan Stanley signed a deal in Q1 2008 to buy a stake in Global Energy International, a bunker fuel wholesaler, and companies such as ConocoPhillips and PetroChina are expanding their presence in the market for shipping and utility fuel.
After a two-year storage expansion boom, a new set of trading companies have taken over from oil majors and independent storage firms as the biggest tank lease-holders in the city-state.
Singapore oil trader Hin Leong, PetroChina, the Emirates National Oil Co (ENOC) and bunker fuel supplier Chemoil have invested up to $1 billion to build almost 4 million m³ of oil product storage capacity, equivalent to about 40% of Singapore's total.
Hin Leong's Universal Terminal, Asia's biggest with 2.3 million m³ capacity, started operations in January. US refiner ConocoPhillips has also taken a lease on independent Royal Vopak's storage terminal in February.
Fuel oil, a residue of the refining process used to drive ships, power generators and as feedstock for refineries, is the largest oil product traded in Asia by volume, with 5-6 million tonnes changing hands every month.
'I wouldn't see Singapore as surplus tankage,' Clyde Michael Bandy, CEO of Chemoil Energy, remarks. 'The new terminals are part of the solution, as Singapore has been short on capacity for 30 years.'