The heavy fuel oil trade in the world's largest bunker hub, Singapore, has taken center stage in recent years as the Maritime and Port Authority of Singapore (MPA) is targeting quality and delivery fraud by introducing mandatory use of mass flow meters.
In the coming years this could also start to include barges carrying marine gas oil, which will in time be required to install mass flow meters, according to the port authority.
Following the new ECA zones in Northern Europe that came into force on January 1st, the demand for marine gas oil has increased and is expected to increase significantly in the years to come, as the fuel, one of several alternatives fuels, will be the most coveted fuel alternative at first.
"We have been receiving feedback from bunker buyers requesting MPA to consider mandating the use of the MFM (Mass Flow Meters) for Marine Gas Oil (MGO) as well," as they foresee the Marine Gas Oil demand will pick up, Dr. Parry Oei, Director (Port Services), Maritime and Port Authority, tells ShippingWatch.
"We will be requiring all gas barges to have the mass flow meters installed on gas barges, once we complete the current exercise to install the meters on fuel oil barges."
Speaking to sellers
Singapore is currently the only major bunkering port to have introduced mandatory requirements for bunker suppliers operating in the port to install mass flow meters on their bunker vessels ahead of 2017. An initiative that has been praised from numerous sides in the bunker industry, as it will help secure bunker deliveries that are otherwise often subject to cheating and fraud in terms of volumes, which can cost carriers millions of USD.
MPA is currently in talks with suppliers of mass flow meters, as the smaller barge used for gas oil needs a similarly smaller mass flow meter.
"We’re talking to sellers in order to find out if they can do it, and hopefully barges with marine gas oil in Singapore will also be equipped with mass flow meters," says Dr. Parry Oei.
Fraud in the industry
Singapore is known for its tough stance on corruption, and the country opted for a similar approach years ago in its dealings with the bunker industry - an industry that often involves bigger or smaller covert business deals and cheating on deliveries. In January 12 people were arrested by the coast guard in Singapore on suspicions of illegal sale of MGO, reported Seatrade Global, and in February the MPA barred two bunker suppliers from operating in the port, including Tankoil Marine, which was collaborating with bankrupt OW Bunker's subsidiary Dynamic Oil Trading.
During a routine control of the two companies, the authorities discovered discrepancies and false statements in the registers on board the bunker tankers. The companies had also in some cases delivered fuel without permission from the authorities, said the MPA.
As the world’s largest bunker hub, with 60 licensed bunker suppliers currently operating in the port, Singapore is highly dependent on shipping, and the authorities did not want carriers to leave the port with bad experiences and wanted to ensure a "painless process," says the Dr. Parry Oei on the decision to introduce mass flow meters.
"With high bunker prices, there are many players who may act inappropriately. MPA decided to leverage on technology to mitigate bunkering malpractices in the industry. For example, the push for the use of the Mass Flow Metering System for bunker custody transfer would allow accurate readings of the bunkers to be delivered."
Most ports seem to have problems with either quality or fraud in terms of bunker. So far Singapore is the only one that has introduced mandatory use of mass flow meters, while Rotterdam is following the example with interest. The actual size of the problem varies depending on whom one asks.
"In Singapore, the authorities work closely with the industry to ensure that the quality and quantity of bunker are delivered transparently and efficiently," says Dr. Parry Oei.