Colombo Port’s first supply of delivered high sulfur fuel oil bunker in the week started Aug. 8 marked another milestone for Sri Lanka, as the country sets out to boost its bunkering prospects while also developing other ports like Hambantota as a dominant marine fuels hub in Asia.

Advantis Bunkering, a subsidiary of Hayleys PLC, became the first supplier of delivered HSFO at Sri Lanka’s Colombo Port, banking on the long-term growth in visits by scrubber-fitted ships, a company source told S&P Global Platts Aug. 10.

The company received clearance from state-owned Ceylon Petroleum Corp. Aug. 6 and loaded HSFO on a 1,500 mt barge the same day. Advantis was canvassing for sales with the product immediately available for delivery, the source said.

Advantis had received “multiple inquiries” from major shipping companies since launching delivered HSFO sales, the source added.

The supply comes at a time when the differential between HSFO and very low sulfur fuel oil, also known as the Hi-5 spread, has mostly averaged more than $100/mt so far this year at the major bunkering hubs worldwide, boosting the uptake of scrubbers.

Robust HSFO sales volumes at Singapore were also providing increased impetus for participants to ramp up HSFO supplies, industry sources said.

Sales of high sulfur bunker fuel — which include IFO 180 CST, IFO 380 CST and IFO 500 CST bunker fuel grades — were up 31.9% on the year to 1.06 million mt, and constituted 25.8% of total sales in June, showed data released in July by the Maritime and Port Authority of Singapore.

Colombo’s latest HSFO foray is also set to provide some competition to Indian suppliers and ports that offer this grade.

Indian Oil Corp. had been the sole supplier of HSFO bunkers there until HPCL started HSFO supplies in June, according to industry sources in Mumbai.

A refiner source in India said Aug. 12 his company’s refinery harbored aspirations to eventually offer HSFO bunker grades across all ports in the country, thanks to growing demand.

India’s bunker fuel prices are typically lower than those at Sri Lanka as the latter buys most of its bunker fuel from Singapore and Fujairah, making the fuel costlier.

But Colombo Port often competes with the one at Mumbai, with price sensitive customers usually opting for the port offering a lower price point.

As far as LSFO is concerned, industry sources said Aug. 12 that sales of the grade at Colombo were robust during July, standing at 30,000 mt compared with an estimated sale of 15,000-20,000 mt at Mumbai.

A Mumbai-based trader said the differential between both bunkering ports is important to buyers. However, there are some structural differences between the two, too, he said.

“Mumbai’s demand is mostly derived from the vessels calling to port for cargo operations, whereas the port of Colombo services more bunker-only calls in comparison,” he added.

Hambantota port developments

Sri Lanka’s Hambantota Port, located on the country’s southern coast, is within 10 nautical miles of the main Asia-Europe shipping route and is in a strategic position on China’s Maritime Silk Road.

The port recently received its first cruise ship call for bunker refueling of marine fuel 0.5%S Aug. 5, since the relaunch of 0.5%S VLSFO by Lanka Marine Services in March.

This was the first cruise ship to call at Hambantota since the outbreak of the coronavirus pandemic in early 2020, according to the Hambantota International Port Group, or HIPG.

Suppliers strictly adhered to the contactless bunkering measures in place at Colombo and Hambantota, permitting bunkering operations to continue unhampered, industry sources said.

Industry sources also said bunker demand in India and Colombo has not been affected by the contactless measures as suppliers have grown accustomed to these constraints over time.

Earlier in June, Ceylon Petroleum Corp. had signed an agreement with HIPG to develop the Hambantota Port as a strategic energy center in Sri Lanka.

HIPG awarded a tender in 2019 to Sinopec for providing IMO-compliant marine fuel and other fuel grades to ships calling at Hambantota.

“We estimate the volume [of bunkering] to surpass 1 million TPA [tons per annum] in the space of five years, bringing us closer to our goal of establishing Hambantota Port as a bunkering hub in South Asia,” HIPG CEO Ray Ren said earlier.

The $1.5 billion port has eight tanks capable of storing a total 51,000 cu/m of marine fuel, according to the Sri Lanka Ports Authority.

Source : spglobal