Brightoil: We Benefited from Singapore Bunker Credit Crunch

by Ship & Bunker News Team
Tuesday March 3, 2015

Brightoil Petroleum (Holdings) Limited (Brightoil) says its bunker trading business received a boost in the second half of 2014 as credit terms tightened in Singapore.

Credit terms offered in Singapore were reported to have significantly tightened in the immediate aftermath of last November's collapse of OW Bunker.

The company said it was able to charge higher prices for credit sales in the more cautious environment.

"Danish company OW Bunker's bankruptcy declaration in November 2014 shook the Singapore bunker market and created tremendous negative impacts in the market," said Brightoil.

"Fortunately, Brightoil was not affected, either directly or indirectly, due to our stringent risk management system and credit policy.

"On the contrary, we benefited from this incident due to the market credit premium at the time."

The company added that it also took a more cautious approach to credit sales to protect itself from bad debts.

"Given the risks in the market, we constrained supply volumes to some customers with high risk profiles during the period so as to ensure our stable operation."

Last week, Brightoil's interim results for the six months to December 31, 2014 showed that revenue from bunkering services had more than halved year-on-year, but revenues from international petroleum products trading grew by around a third, to lift the segment's revenues overall.

Segmental analysis showed that profit for the International Trading and Bunkering business had reduced by 64 percent year-on-year, to HK$171 million ($22 million).

Brightoil said its "twin engines" business model, including upstream and mid-downstream segments, had seen group profit increase 3 percent.