Escaping Singapore’s Congestion, Vitol to Sell Marine Bunkers in Malaysia

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December 26, 2012
vitolVitol Group plans to start sales of marine fuel, or bunkers, to a port in southern Malaysia as it seeks to supply ship owners that moved from Singapore, the world’s second-biggest container port.

Vitol Trading Malaysia Labuan Ltd. may sell bunker cargoes to shipping companies at Tanjung Pelepas, in the Malaysian state of Johor, in about six months’ time, Managing Director Khairul R. Ramly said in an interview on Dec. 17. Vitol wants to supply about half of the bunker demand of 3 million metric tons a year at the site, according to Khairul. It is located about 16 miles (26 kilometers) from Singapore.

“We’ll start small bunker deliveries at Tanjung Pelepas port,” said Khairul. “Maersk is a big shareholder, that’s the first target. Hopefully we’ll get 50 percent of the market, not in the first year, but slowly. People are calling us.”

Vitol is taking advantage of spill-over demand for refueling services as vessel congestion grows in Singapore and companies relocate. Potential customers include AP Moeller- Maersk A/S, the world’s largest container-shipping operator, which moved its transshipment hub to the port from Singapore in 2000, said Khairul. Evergreen Marine Corp. Taiwan Ltd., the operator of Asia’s largest container line, also moved there.

The fuel will come from a storage facility at Tanjung Bin, less than a mile from Tanjung Pelepas, operated by VTTI, he said. Vitol and MISC Bhd., a Kuala Lumpur-based logistics service provider and ship owner, jointly own VTTI, which can store 900,000 cubic meters of oil product at its facility.

Capacity Expansion

“Growing this bunkering business is our first priority, something that we should be very competitive in, because of where we are,” Khairul said. “It’s five minutes for us to load a cargo from Tanjung Bin instead of one and a half hours from Singapore.”

Capacity may expand to as much as 1.6 million cubic meters, with additional space offered to third parties in the third quarter of next year, according to VTTI’s website.

Singapore is the biggest bunkering port globally and supplied a record 43.2 million tons last year, according to data from the Maritime and Port Authority. The city-state is the biggest container port after Shanghai.

Vitol has four employees in its Malaysian office in Johor who handle the trading, marketing and operations of domestic contracts, Khairul said. The company also has plans to purchase iron ore domestically for export to China next year, he said.

– Ann Koh and Chong Pooi Koon, Copyright 2012 Bloomberg.
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