ShippingWatch

Singapore adopts mandatory bunker control

A long history of bunker fraud in Singapore must come to an end. Before the end of the year, new barges will likely only be approved for bunker transfers if they have so-called flowmeters installed.

Photo: Insatech

Bunker fraud must come to an end, which is why the Maritime and Port Authority of Singapore (MPA) for a long time has been working to introduce mandatory use of flowmeters in relation to the sale of bunker in the port region, the world's largest bunker hub.

Several sources present at last week's MPA meeting say that the port authority has now finally adopted a proposal stating that barges, before the end of 2014, can only be approved for bunker transfers if the vessels have approved mass-flowmeters installed.

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The mass-flowmeter will ensure that the selling bunker company does not cheat on the scale, thus transferring less fuel to the buyer than agreed upon in the deal. And the ambition is for Singapore to establish a standard transfer, in many ways quite similar to the method known from on-land gas stations. At these facilities there is seldom any suspicions that car owners are cheated when companies such as Force Technology - on the tank stand - guarantees that a liter is a liter.

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The problem in terms of trading ship fuel is the tradition of buying and selling in mass/ton, but on the ships the crew often works solely with volumes. This means that those who wish to cheat are able to transfer lower-density oil fuel by pumping air into the transfer, or they can transfer the bunker at higher temperatures, by which the oil has a bigger volume than at normal temperature.

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Over time all bunker barges in the Port of Singapore will carry approved and sealed mass-flowmeters on board, though it remains unknown which deadline the port will introduce for the implementation.

Sources familiar with the case say that it could be up to two years before this happens, because the MPA is nervous whether suppliers can deliver the necessary flowmeters in time.

At the Maritime Week in Singapore in April, The Maritime and Port Authority is beleived to make an official statement about the implementation of mandatory flowmeters, along with further information about who will supply the specialized measuring equipment.

ShippingWatch has tried to get a comment from the Maritime and Port Authority of Singapore, but without luck so far.

Everyone knows about the problems

Bunker fraud has long been a problem in the market in Singapore, and as ShippingWatch reported during the fall, many carriers are aware that they are being cheated, and they are not getting the fuel volumes they pay for.

"We've seen examples where this quickly results in not receiving several percentages of the ordered fuel, if one's not careful. It could easily be three or four percent of the ordered fuel, and that quickly becomes a lot of money," said Lars Lundegaard, Senior Vice President & Head of Technical Department at shipping company Norden.

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Years ago, Maersk Line acted on the fact that the company was not getting the fuel it paid for, and over the last five years the carrier has installed mass-flowmeters on many of the company's ships.

"We had to make sure we got what we paid for," said Claus Skytte Nielsen, Global Head of Bunker Sourcing, to ShippingWatch.

In recent weeks, several bunker companies operating in Singapore have lost their bunker-trading licenses. The two companies Excel Petroleum Enterprise and Lian Hoe Leong & Brothers had - according to the Singapore port authority - violated the requirements and conditions of their licenses by allowing other players to use their so-called delivery notes (BDN) when delivering bunker oil.

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