Fratelli Cosulich to expand physical supply bunkering operations outside Singapore

Genoa-based bunker company Fratelli Cosulich plans to expand its physical operations outside Singapore as part of its growth strategy, CEO Timothy Cosulich told S&P Global Platts.

The family-owned Fratelli Cosulich currently has offices in Dubai, Singapore, Vietnam, Hong Kong, Italy, Monaco and New York. It carries out trading operations in all of these markets, but has physical supply operations only in Singapore.

“We will soon announce a new location where we will be physical suppliers with a fleet of six (owned and operated) tankers,” Cosulich said Tuesday, adding that “we expect the new physical supply location to be up and running by the end of Q1 2020”.

In Singapore, the company owns and operates a fleet of six bunker tankers, Cosulich said.

“For the time being all six barges are dedicated to VLSFO [very low sulfur fuel oil], one product per barge,” he said.

The company started delivering low sulfur fuel oil from some of its bunker tankers in Singapore from October last year, well ahead of the start of the International Maritime Organization’s global sulfur limit rule for marine fuels in January, as demand for cleaner fuels received a big impetus due to stricter environmental rules in international shipping, Platts reported previously.

Fratelli Cosulich’s global bunker sales were about 5.8 million mt in 2018, Cosulich said.

In 2019, the company surpassed 6 million mt in bunker sales of which Singapore represented 30% of the total, Cosulich said.

Last year, Singapore recorded a bunker sales volume of 47.5 million mt, data released by the Maritime and Port Authority of Singapore in January showed.

Meanwhile, Fratelli Cosulich is also considering a foray into LNG as a marine fuel.

“We are actively looking into that [LNG trading and bunkering] and plan to make our first investment soon,” Cosulich said.

“We expect LNG to continue growing and to help the industry transitioning towards a zero-emission end target,” he added.

This comes as global demand in the LNG bunker market is expected to show continuous growth in the coming years, according to industry sources.

LNG bunker demand is expected to reach 10 million mt a year by 2025 from only 1 million mt currently, LNG bunker general manager at Total Marine Fuel Global Solutions Xavier Pfeuty said at a recent industry event in Amsterdam, Platts reported this week.

By 2050, Pfeuty said LNG would make up around 25%-30% of the global LNG bunker mix, adding there were signs from some terminals of reducing tariffs on LNG arrivals.

Singapore bunker prospects
Singapore is the world’s largest bunkering port, located along one of world’s busiest waterways, with close to 1,000 ships anchored at any given time. A ship calls at Singapore port every two to three minutes, bringing the total to around 130,000 ships a year.

However, bunker sales in the city-port declined for the second successive year in 2019, and was the lowest volume sold since 2015, according to official data.

Still, Cosulich noted that Singapore’s bunkering prospects remained strong.

“I believe Singapore remains the undisputed leader as a bunkering hub and I don’t see that changing in the near future,” Cosulich said, adding that the strong regulatory framework, together with a competitive supply market will continue to contribute to Singapore’s top port status.

Cosulich also said that Singapore, as a port, was rather well prepared for the IMO 2020 rule.

“But of course — as anywhere else — with big changes there are always some unexpected events that you have to deal with,” Cosulich said.

The IMO has lowered the amount of sulfur that ships can emit as they burn bunker fuel on the high seas to 0.5% from 3.5%, effective from January 1, 2020.

An MPA spokesman told Platts earlier this month that as of December 2019, 161 mass flow meter fitted bunker tankers are able to supply compliant fuel — with sulfur content of 0.5% m/m or less — while 49 MFM-fitted bunker vessels were able to supply high sulfur fuel oil to ships that are retrofitted with scrubbers.

Currently, all MPA-licensed bunker tankers supplying fuel to ocean-going vessels have been fitted with calibrated MFM and can supply various blends of compliant fuels, he said at the time.

However, some industry sources in Singapore recently said despite the preparations, barge availability still remained tight, reflecting the surge for cleaner fuels.

“In a transition period it is normal to have some adaptation required… I expect the situation to stabilize soon and local barge operators to ensure that barge availability is never an issue,” Cosulich said.
Source: Platts