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BUNKERING


Best ever bunker sales predicted


he expansion of the Panama Canal will add a third set of larger and wider locks that will double capacity allowing the passage of post-Panamax vessels. It will have a positive effect on Panama’s bunker sector as more ships will be able bunker in Panama after 2014, when the inauguration of the future locks will take place.


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Such an encouraging forecast has attracted many new players in the market, conservatively estimated at around 4m metric tonnes to date. About one-third of all ships transiting the waterway bunker on both entrances of the Panama Canal, with an average of between 4,200-4,500 vessels being served every year.


Bunker sales jumped to 3.9m tonnes in 2008, the best year ever. During the first half of 2011, sales rebounded 25.5% compared to the year before and reached 1.7m tonnes. With these, industry players predict total sales in 2011 will be over 3.5m tonnes, since consumption rises historically during the second half of the year.


Panama bunker market is composed of eight companies that operate 23 vessels and 20 terminals. Competition is fierce amongst the fuel and main diesel suppliers. A few firms engage in spot deliveries, says Panama Chamber of Shipping president and gm of VT Shipping, Jose Digeronimo. Bunker prices [in Panama] are competitive, similar to Singapore and slightly above Houston, in the range of 1.5%. ‘Panama has traditionally followed in Houston’s steps,’ he explains.


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The instability or volatility of price ‘always affects all the markets and not only Panama bunker market because people are afraid to keep large inventories on tanks and on vessels,’ explains Andres Galavis, a bunker consultant and former PDVSA board member. ‘We have been going through this type of situation many times in the past and it levels out, so I think it is nothing to worry about in the long term.’


Juan David Morgan Jr, Melones Oil Terminal director


Bunker players say that margins are ‘very small’ because of a rise in operational costs when prices have remained almost the same for the past four years, says Juan Carlos Heilbron, executive vice president of Trader Tanker that operates 10 vessels. Trader Tanker has barges with a capacity of 3,000 tonnes and one of 8,000 tonnes operating on long-term contracts for Chevron, Chemoil and Bominflot and three vessels for the spot market. ‘The bunker market is getting more competitive since it is entering an over


capacity of barges,’ comments Interoceanic Supply Services (ISS) director Hugo Torrijos Dajer. ‘Panama does not escape feeling the strains which are aggravated by increasing competition and reduced margins. We are counting on the Panama Canal expansion and more top of the line oil storage facilities to increase demand for bunker barge services,’ says Dajer who started ISS in December 2007. The company currently operates five barges. The Panama Maritime Authority (AMP) that regulates the sector has extended the allowance for single-hull tankers to navigate Panamanian waters until December 2012 following MARPOL regulation that allows each country to decide about the vessels operating in an area of its own jurisdiction, giving some respite to bunker barge owners as the conversion to double hull from single hull requires lots of investment. However, under the pressure of some clients and specially the oil majors, most companies started to buy double hulls or converting their vessel into double hull. This has made a dramatic change to the age of the fleet. Meanwhile, several new players have come to Panama recently: OW Bunker, Aegean Marine Petroleum Network and Oiltanking.


One attraction of bunkering in Panama is that vessels transiting the waterway have an average 8-10-hour waiting time before coming into the channel and the locks, during which they can bunker on both entrances of the Canal.


Panama’s location will continue to draw PANAMA MARITIME REVIEW 2011/12


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