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SSA, MPA confirm no bunker disruption in wake of fraud at OW
THE Singapore Shipping Association (SSA) has joined the Maritime and Port Authority of Singapore (MPA) in confirming that there has been no disruption to bunker supply and bunkering operations in Singapore.
This comes after Denmark-based marine fuel supplier OW Bunker reported a US$125 million fraud in its Singapore-based subsidiary Dynamic Oil Trading (DOT) and a US$150 million risk-management loss, which prompted its banks to baulk at credit extensions.
On Thursday, SSA and MPA organised an industry dialogue with close to 50 companies from the SSA to give updates and discuss how best to minimise any fallout on the local bunkering scene.
Bunker is a liquid fuel obtained from crude oil that is used by ships. Earlier this week, MPA said in a statement that there are more than 60 bunker suppliers in Singapore, and that OW Bunker Far East (Singapore) accounted for under 3 per cent of the 42.6 million tonnes supplied in Singapore last year.
Firms were advised to carefully inspect their contractual obligations, and to work closely with their stakeholders to avoid or minimise disruption in their operations, SSA and MPA said in a joint release on Friday.
"The bunkering industry here is a well-regulated one," said SSA president Patrick Phoon. "While I urge my members to seek professional and legal advice as necessary, I also hope that those affected by this event will remain calm and not resort to knee-jerk reactions which may rock the stability and reputation of Singapore's bunkering industry. My association will be working closely with MPA to ensure that there will not be any unnecessary disruption in bunker supply and operations here."
Meanwhile, MPA chief executive Andrew Tan added that the session was a useful one as it brought the industry together to understand the situation and explore how best to move forward.
Last year, OW's total transaction volumes grew to 29.2 million tonnes, making it a joint global market leader with some 7 per cent market share. News of OW's bankruptcy has sent marine fuel prices northwards and could trigger a credit crunch in the industry as suppliers implement stricter credit terms.
At least five firms are said to be filing legal claims totalling more than S$5 million against OW's Singapore units, one of them being Singapore's largest independent oil trader Hin Leong Trading. A Reuters report said others include Bunker House Petroleum, Equatorial Marine Fuel Management Services and Panoil Petroleum. Two of South Korea's major refiners are also said to be considering legal action.