29January2020

Family-run Singapore bunker business ranks higher than the majors

Featured on SHIPPINGWATCH on 29 January 2020. Also available on: https://shippingwatch.com/suppliers/article11880986.ece

Two brothers – along with their parents – own, run and manage the Singapore­ based Equatorial Marine Fuel, which has gained a lot from tighter regulation. Two VLCCs for storage of low-sulfur oil represent the latest acquisition.

BY TOMAS KRISTIANSEN

SINGAPORE

With a monthly supply of up to 450,000 tons of bunker, Equatorial Marine Fuel ranks as number four among the biggest companies in Singapore providing fuel for vessels.

Not that many years ago, the family-owned and -run business was number 13 on the list of bunker suppliers in the world’s most important bunker hub.

One thing, above all, has enabled Equatorial to expand its business over the last couple of years, namely the introduction overnight of mass flow meters in Singapore, which banned the unregulated sales of fuel to ships and made it mandatory for suppliers to account for the volumes delivered.

No cappuccino! No cheating!


“Today we can expose the efficiency of the company, which has become a feature that matters”

EXECUTIVE DIRECTOR CHOONG ZHEN MAO, EQUATORIAL MARINE FUEL


Whereas the rules, implemented in January 2017, have seen licenses revoked and have shut down and expelled companies from Singapore, family-run Equatorial Marine Fuel is probably one of the bunker suppliers in the region that have benefited the most from stricter rules.

From the introduction of flow meters and till today alone, the company has doubled in volume and doubled its number of barges, simply from taking over the vessels that were left from the shutdowns.

18 new barges in total, all of which are part of the reason why Equatorial finds itself in front of a major like Shell in the port today, as was revealed the other day by Singapore’s Maritime and Port Authority (MPA).

More transparency in the market

Together with his brother and their parents, Executive Director Choong Zhen Mao heads Equatorial from the relatively new offices in downtown Singapore. He is convinced that the achievements of the business are rooted in more than just a larger number of barges.

“Overall, the new rules gave more transparency to the market, which was beneficial for us. Today we can expose the efficiency of the company, which has become a feature that matters. In that sense, the entire market has changed, and you are able to defend the proposition to maintain costs low,” Choong Zhen Mao tells ShippingWatch during an interview.

Talking to stakeholders in Singapore, peers and customers, a general view is that the introduction of the flow meter has cleaned up a market that was rather opaque, providing room for cheaters who were able to sell less bunker than the shipping companies actually paid for.

Looking at the number of companies that have been shut down by the local regulators confirms that the introduction of the rules was not just monkey business.

Last year alone, a couple of bunker suppliers were caught using magnets to cheat on ship fuel delivery. In October, the MPA announced that Inter-Pacific Petroleum had used “magnetic interferences” to bypass mass flow meters on its ships. The company immediately lost its license to operate barges.

Customers want to know

If flow meters introduced transparency and accountability, the recent implementation of the sulfur rules only underscores the desire among customers – the shipping companies calling in Singapore – to know exactly what they are buying. High-sulfur, marine gas, low-sulfur and very low-sulfur have pushed the bunker market further to be even more specific about its commodities.

Equatorial has recently leased two VLCCs that are now turned into low-sulfur fuel storage facilities for the company. In that way, there is adequate fuel, and Equatorial does not need to worry about the risk of mixtures that is a constant threat to the market. Another company that has chosen this option is crude oil carrier Euronav, which also has a VLCC anchored off Singapore serving as fuel storage.

“We have an easy access to storage and we can test the oil before it is delivered,” argues Choong Zhen Mao.
A couple of weeks after the implementation of the bunker rules, Equatorial’s market is made up of up to 70 percent low-sulfur fuel, 20 percent gas oil and ten percent high-sulfur bunker used by the vessels that have scrubbers installed. The company has a turnover of around SGD 2 billion.

There are no immediate plans to buy up companies or acquire new assets based on the principle that it should be justified by a higher demand.

Chinese oil giant Petrochina has taken the spot as the largest bunker supplier in Singapore. Petrochina, part of China’s largest oil and gas company, China National Petroleum Corp., was the second-largest supplier in the port during 2018 after Ocean Bunkering Services.

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