INTERVIEW: Monjasa Sees Slow Start to Panama Biofuel Sales

Monjasa carried out the first biofuel bunkering in Panama in February. Image Credit: Monjasa

Panama, one of the world's top bunkering hubs, has seen a slow start to biofuel bunker sales.

As Ship & Bunker reported previously, Monjasa set out plans at the start of 2025 to become the first biofuel supplier in Panama, and went on to make its first delivery there in February.

But demand for the new alternative fuels since then has been disappointing, Jonas Bruslund, general manager for Latin America at Monjasa, said in an interview with Ship & Bunker.

"Together with our partners, we took a market position by introducing biofuels in the Panama Canal," Bruslund said.

"However, the local biofuels sale has not developed as expected and we have only completed a few deliveries since the first ever supply in Panama in early February this year.

"Peru has also experienced a somewhat difficult start, whereas Colombia has seen a bit more traction – led by the cruise liner segment.

"In a larger perspective, we need to come clean and say things aren't going as fast as the industry sometimes makes them out to be."

What's Holding Back Demand?

Pricing and regulations are the main factors preventing the emergence of biofuel demand in the region, Bruslund said.

"The feedback we are getting from the market is that the vast majority of the customer demand is lifted in either Singapore or ARA," he said.

"These are the most attractive locations from a pricing perspective and shipowners tend to pool their biofuels volumes on the ships sailing in those regions.

"Despite Panama being significantly more competitive than both Peru and Colombia, we continue seeing this very limited demand.

"Naturally, we cannot compete with ARA and Singapore when it comes to price, so we didn't expect to see demand anything similar to those markets.

"But considering the amount of vessels calling Balboa and Cristobal and the amount of traffic through the canal, we had very different expectations."

Monjasa has thus far been sourcing its biofuels for sale in Panama from Northwest Europe. More local sourcing options may be possible, but this looks unlikely to deliver lower prices in the near term.

"We have explored the option of bringing in feedstock from both Peru and Colombia before we engaged with our current biofuels partner, but unfortunately it hasn't proven to be more competitive or feasible," Bruslund said.

"We continue challenging the status quo and we are always looking for new opportunities of making the product more economically attractive."

Regulatory Barriers

A large element of the impetus behind biofuel demand growth elsewhere has been compliance with EU rules - the EU-ETS and FuelEU Maritime regulations - and the distance between Latin America and Europe means this has been less of a factor there.

The pooling mechanism under FuelEU Maritime in particular - meaning GHG overcompliance and undercompliance can be averaged out over fleets operating in different regions and for different companies - makes it logical for shipping firms using this mechanism to buy biofuels only at the cheapest possible location.

The full phasing-in of the EU-ETS for shipping next year, with shipping from then on having to buy EUAs to cover 100% of their emissions, rather than 70% at present, may boost global demand for biofuels. But it remains unclear whether Latin America in particular will benefit.

"The amount of vessels that must lift biofuels in the region for compliance reasons is very low," Bruslund said.

"The demand that we have seen so far has mainly been companies doing trial-runs of certain vessels types or related to other commercial reasons.

"In Latin America, the big shift in demand for biofuel has failed to materialise.

"Therefore, the industry needs to be transparent about the pace of the fuel transition to tackle these road blocks.

"Today, it's still uncertain if biofuels will become a broadly accessible fuel grade globally."

Meanwhile, the company remains supportive of local efforts to support the emergence of alternative fuels.

"The Panama maritime authorities have been nothing but supportive about adding biofuels to the Canal's total fuel mix," Bruslund said.

"We believe that the true issue behind these immature markets continues to be the incomplete global regulation."

Clear Incentives Needed

Bruslund argues there will need to be clear incentives to take on biofuels before a more mature market emerges in Panama and the wider region.

But in the meantime, conventional fuel sales in the region remain a healthy part of Monjasa's business. Balboa and Cristobal were the company's second- and fourth-largest supply locations respectively in 2024, with Cartagena and Callao at ninth and tenth positions, and these locations will have taken up the lion's share of the 2.4 million mt of bunker sales the firm completed in the Americas last year.

"Monjasa remains strongly committed to the existing bunker market in Panama, but we would like to play an active role in promoting the fuel transition across the markets we operate," Bruslund said.

"But any transition must be driven by clear incentives - compliance or price."

Regulations may start to deliver those incentives in the coming years. The gradual toughening of the EU-ETS and FuelEU regulations, and the emergence of the IMO's GHG framework from 2028, may start to drive up biofuels prices in hubs like ARA and Singapore, making Latin American prices more attractive. 

But this effect may take time to emerge.

"We will continue playing our part and providing quality infrastructure and logistics for the shipowners," Bruslund said.

"But if the demand doesn't pick up we will eventually have to postpone further projects until more firm market commitments are firming up."