AS THE marine industry decarbonises, Sing Fuels wants to go beyond bunker trading – selling fuel to ships – to provide energy-transition services to companies in this sector.
“The marine transition is a trillion-dollar dilemma for the next decade,” chief executive Vikash Dhanuka told The Business Times in an interview.
“Multiple solutions will be required to help a ship reduce its emissions of greenhouse gases – it will not come from any one source, product or technology.”
The International Maritime Organization has set a target for the shipping industry to cut emissions by 20 per cent by 2030, and achieve net-zero emissions by 2050.
That looming deadline has pushed Sing Fuels to do more than provide traditional fuels. It intends to offer “energy-transition-as-a-service” to shipowners and operators, helping them comply with global environmental, social and governance regulations.
“By 2030, we anticipate that our fuel business should be a smaller part of us, and that we should have transformed into an energy-transition company,” said Dhanuka.
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It is an ambitious goal for a company that has operated largely as a pure marine fuel trader since its founding in 2012. Marine fuel oil and gas oil continue to make up 90 per cent of its revenue.
The rest comes from its diversification into base oil and petrochemicals, as well as in-house lubricant brand Sing Lubes, which offers more than 300 grades of lubricants for automotive and industrial uses.
Going global, going green
In FY2023, Sing Fuels’ revenue rose 10 per cent to approach S$1 billion. This was driven by the growth in fuel volumes as the shipping industry rebounded in 2022, said Dhanuka.
Headquartered in Singapore, Sing Fuels operates in more than 350 ports across the world. It has a branch office in Dubai and three representative offices in the United Kingdom, Greece and South Africa.
For its consistent overseas growth efforts, Sing Fuels bagged the Internationalisation Award at the Enterprise 50 Awards 2024.
Granted, the company has not only expanded. It has also closed smaller representative offices in Denmark and the United States, though it still has some traders based there.
Sing Fuels instead spent two years building up its Dubai branch office, which now serves as the regional headquarters for the Gulf states, Africa and Eastern Europe, with senior management stationed there.
Said Dhanuka: “We realised it was a better strategy to have ‘deeper’ offices. It was much easier for collaboration and to manage operations, finance – everything – this way.”
As for new markets, the company is set to open a representative office in Turkey by December.
Another will open in Shanghai by the first quarter of 2025, to meet increasing demand from customers in Chinese ports. Sing Fuels is also hiring staff in the Chinese city of Zhoushan, home to the world’s third-largest container port.
“Five years ago, China was not a very large supplier of bunker fuel,” said Dhanuka, noting that the company had previously opened a representative office there but closed it in 2016. “But today, it’s among the top five bunkering ports in the world.”
This April, Sing Fuels also entered India by setting up a subsidiary. The market was chosen for its rapidly growing energy needs, with rising demand for bunker fuels and other oil products, said Dhanuka.
Another key reason is India’s production of biofuels – a renewable energy source that Dhanuka is betting on for the long term. Biofuels are derived from plant or animal matter, with the two most common types being ethanol and biodiesel.
Sing Fuels currently sells small quantities of biofuels to some ports in Asia and Europe, and wants to do more.
“There is a lot of discussion going on for hydrogen, ammonia and various kinds of alternative fuels such as liquefied natural gas,” he said. “But our bet in the next decade is on biofuels – we believe that is the only plausible solution that is scalable for the marine industry.”
Biofuels are compatible with the existing systems and engines that run on fossil fuels in ships. Compared to other alternative fuels, less infrastructure investment is needed when switching to biofuels, Dhanuka explained. This makes them more practical and cost-efficient for organisations looking to reduce their carbon footprint.
He sees huge opportunities in India, which is the world’s third-largest producer and consumer of ethanol. The country has trebled ethanol production capacity over the past five years as it aims for its petrol blend to be 20 per cent ethanol by 2025, as part of its energy-security goals.
Sing Fuels is now looking to acquire biofuel manufacturers in India, or invest in government projects involved in such production. This will eventually allow the company to start supplying biofuels to ships across the world, though commercial viability will depend on each country’s local regulations, said Dhanuka.
Moving into “energy-transition-as-a-service”
Yet, marine decarbonisation must go beyond alternative fuels, said Dhanuka.
“If you have to bring down your greenhouse gas levels, how do you do that? There’s a massive capacity, capability and financing gap in the shipping industry today – a shipowner will need to go through many steps to make this transition. That’s what we want to solve.”
This is what drives the company’s transformation into what Dhanuka dubs “Sing Fuels 3.0”.
Sing Fuels wants to build a digital platform that provides end-to-end energy-transition services for marine clients, to help them meet their sustainability targets. It is working with consulting firms, green financiers and service providers to develop this.
The platform’s services will range from consulting to product implementation and funding. Decarbonisation road maps can be customised for clients based on their needs and vessel sizes.
Dhanuka plans to launch “energy-transition-as-a-service” by 2026, and aims for this to provide more than half of Sing Fuels’ total revenue by 2030.
Gunning for inorganic growth
The company also intends to grow through mergers and acquisitions. Some of these will be in its traditional businesses such as bunker trading, which the company is not abandoning.
Beyond the marine industry, Sing Fuels wants to take stakes in more sustainability-related ventures.
These could be in areas such as sustainable waste management and carbon management, with the latter including carbon trading, carbon compliance, carbon-credit generation and carbon contracts.
Such inorganic growth was previously not possible as Sing Fuels lacked the cash reserves and sufficiently robust operating systems, said Dhanuka.
To streamline its global operations, the company spent three years and more than S$1 million building a new enterprise resource planning system. The system has since been rolled out across all of its markets.
“What we can achieve now, is not what we could have achieved five years ago,” Dhanuka said. “But our current capabilities – in terms of resources, funding and assets – allow us to look at acquisitions now.”
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