Pandemic cuts global marine fuel demand

Members of the International Bunker Industry Association forecast a 7 to 17 percent drop in bunker fuel demand globally in 2020. (AFP)
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Updated 17 September 2020

Pandemic cuts global marine fuel demand

  • Industry expects further mergers and acquisitions among bunker suppliers

SINGAPORE: Global demand for marine fuels is expected to fall by up to 17 percent due to the impact of the coronavirus pandemic on world trade, setting the stage for more consolidation among bunker suppliers, an industry executive told a conference on Wednesday.

Banks scaled back on their commodities trade finance after the coronavirus crisis led to defaults by some trading houses and exposed a series of frauds, leaving small and medium sized firms most exposed.

Unni Einemo, director of the International Bunker Industry Association (IBIA), told the virtual Platts APPEC 2020 conference that firms were contending with low demand, low margins, ample supplies, increased counter-party risk and constrained access to capital.

“Because of that we might expect further consolidation through mergers and acquisitions or attrition,” he said, adding that some firms could be forced to quit the market. “Global bunker demand is expected to decrease significantly in 2020, even if it had held up quite well (in April and May).” 

IBIA’s members forecast a 7 to 17 percent drop in bunker fuel demand globally in 2020, she said.

Global marine fuel demand is estimated at about 300 million tons per annum, or about 5.2 million barrels per day (mbpd).

In its latest report released on Tuesday, the International Energy Agency said “fuel oil demand, which includes marine bunker as well as power generation and industrial uses, is forecast to decline by only 0.4 mbpd, or 6.3 percent in 2020.”

By comparison, premium transport fuels, which include jet fuel, diesel and gasoline, are forecast to have lost about 7.4 mbpd, or 11.6 percent, of demand in 2020, according to the IEA.

Most bunkering markets saw a big drop in June, with some seeing a “staggering” 30-40 percent year-on-year contraction, although Singapore has to be among the least affected markets, said Einemo.

Singapore, by far the world’s top bunkering hub, saw year-on-year growth in marine fuel sales every month this year with the exception of May and June, which contracted by just 2 percent each, official data showed.

Singapore’s resilience has a lot to do with it “having the widest variety of fuels on offer (and) it has become a preferred port because buyers are confident they are going to get the quality and quantity they are buying,” said Einemo.

But in other hubs such as in the United Arab Emirates’ Fujairah, bunkering demand plummeted as the spreading coronavirus slowed shipping activity.

Emirati consortium studies implementing wind energy project in Egypt

Updated 29 September 2020

Emirati consortium studies implementing wind energy project in Egypt

  • The coalition has submitted a request to the New and Renewable Energy Authority to allocate land for the purpose

CAIRO: Official sources at the Egyptian Ministry of Electricity and Renewable Energy revealed that an Emirati consortium is currently studying the implementation of a wind farm, with investments of about EGP 8 billion ($500 million).

The coalition has submitted a request to the New and Renewable Energy Authority (NREA) to allocate land for the purpose, and the authority has already agreed to it. The total capacity of the station is about 500 megawatts.

The consortium is carrying out studies that will take two years and that include measuring wind speed, monitoring bird migration and studying the soil for the project, which will take place in the Gulf of Suez region as it has a strong wind force, an important factor.

The station is expected to implement the BOO system (Build, Own, Operate), provided that the coalition sells the energy produced to the Egyptian Electricity Transmission Company, the operator of the national grid, entrusted with the purchase of energy.

The area of land allocated for the establishment of the project — in cooperation with the private sector under the usufructuary right system — is 7,872 km, according to data from the NREA.

The sources pointed out that the average selling price of renewable energy is currently declining, ranging between $0.02 to $0.025 per kilowatt hour. Land is allocated for 2 percent of the energy produced or its equivalent and throughout the project’s duration; then, the authority will recover it.

Egypt is rich in natural resources, including wind and solar energy, which makes it one of the largest producers of renewable energy. The total installed capacity of renewable energies is close to 20 percent of the maximum load.

Egypt plans to increase its total production of renewable energy to about 20 percent of the total electricity generated by 2022, of which 12 percent from wind, 6 percent from hydroelectricity, and 2 percent from solar.