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Canal expansion opportunities P

Michele Labrut talks to bunker suppliers in Panama about future growth in the market

anama’s bunker market is expected to increase substantially with the expansion of the Panama Canal in 2014 that will double capacity and allow the

passage of post-panamax vessels. Industry players believe that bunker sales that

topped 2.8m tonnes in 2010, will augment with the increase of the number of ships taking on bunkers in Panama after 2014. The promising outlook has attracted

international and domestic new players who are investing in the extension and enhancement of Panama’s bunker fleet and in the construction of new storage facilities. About one-third of all ships transiting the

waterway take bunkers at either entrances of the Panama Canal, with an average to date of between 4,200 - 4,500 vessels being served every year. In 2008, bunker sales jumped to 3.9m tonnes,

the best year ever. The growth seen in previous years was “due to the recovery of the market after the big fall in 2008, I believe that [first half 2011 decrease] has to do with the slowdown of the world economy and the increase of crude prices during that period,” says Andres Galavis, bunker consultant and former PDVSA board member. He explains that 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”. “We have been going through this type of

situation many times in the past and they level out, so I think it is nothing to worry in the long term.” The first half slow down is due to a number of

factors, but current, inefficient storage facilities and the lack of pier space acts to discourage customers for who time is money. “Today tankers bringing fuel to Panama for sale can wait up to two weeks to get a berth to discharge a cargo on the Atlantic side,” says a source in the industry. The Panama bunker market is fiercely

competitive comprising eight companies that operate 28 vessels and 20 terminals and marine diesel suppliers. “Bunker prices [in Panama] are competitive,

similar to Singapore and slightly above Houston, in the range of 10%. Panama has traditionally

followed in Houston’s steps,” explains VT ships general manager Jose Digeronimo. However, bunker players say that margins

continue to be ‘very small’ because of a rise in operating costs while prices have remained almost the same for the past four years, according to Juan Carlos Heilbron, executive vice president of Trader Tanker, that operates 10 vessels. “Spot prices have been falling too as the

market is entering a period of overcapacity [with new players and barges],” says Interoceanic Supply Services (ISS) director Hugo Torrijos Dajer. “Panama does not escape feeling the strains [of falling prices] which are aggravated by increasing competition and reduced margins,’ says Torrijos Dajer who started ISS in December 2007. However, he does not believe the situation will

continue. “I don’t think the economics will support it. In Panama, we have to begin moving products differently but always taking in account to include shipping and storage [in prices at the end],” he adds. The Panama Maritime Authority (AMP), which

regulates the sector has extended the phase out date for single-hull tankers sailing in Panamanian waters until December 2012. This gives some respite to bunker barge owners as the conversion to double hull from single hull is a hefty investment. “Since there is no market for single hull barges anymore, it is more convenient to convert them,” says Torrijos Dajer. Meanwhile, several new players have come to

Panama recently: OW Bunker, Aegean Marine Petroleum Network and Oiltanking. ”We have seen a positive start and hope to continue this way,” says OW Bunker Panama branch manager Andrew Huzzard. “There are a lot of changes in the market and that give us a chance.” “The launch of our physical presence [in

Panama] will not only further strengthen our offering, but also consolidate our position as one of the leading suppliers in the region. Fundamentally, we know what our customers want, and have the knowledge, experience, product quality and infrastructure to deliver it,” said Huzzard in a statement when the company began operations in November last year.

Continued on page 17 Seatrade Bunkering Report 2011 15 ‘

Spot prices have been falling too as the market is entering a period of overcapacity.

Hugo Torrijos Dajer, Interoceanic Supply Services

Courtesy of the MPA

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