Bunker Business Surging for Hong Kong Supplier

NewOcean is building an oil depot in Zhuhai, China

In its first eight months of operation, the bunkering business of Hong Kong-based NewOcean Energy Holdings Limited [HKG:0342] (NewOcean) supplied about 200,000 tonnes of fuel oil for a turnover of about HK$1.0 billion ($129 million), from which it profited HK$38.7 million ($5.0 million), the company reports.

NewOcean, which primarily supplies liquefied petroleum gas (LPG) in southern China, is close to completing construction of an oil depot in Zhuhai after starting bunker station services in Hong Kong in May 2012.

"A customer base of certain size is expected to be established before the completion of Zhuhai oil storage depot construction works, ensuring a considerable turnover rate upon commencement of operation of the oil storage depot, for the oil products business to lower our operation costs and increase our profitability," said Managing Director Lawrence Shum.

The company said its marine bunkering business in Hong Kong has built a business network outside of mainland China that will offer the depot a customer base in addition to local customers.

Oil products accounted for 7.5 percent of group turnover in 2012, while the company achieved total revenue of HK$13.5 billion ($1.7 billion) and profits of HK$810 million ($104.3 million) for the year.

"With strong momentum, the newly established oil products business is expected to exhibit faster growth than the LPG business.

"It is a reasonable expectation that the sales volume of oil products business would surpass that of LPG business in the next few years, and generate enormous profit to the Group."

NewOcean announced in January that it had won a contract from the Hong Kong government to deliver at least 12 million liters of ultra-low sulfur diesel for two years in collaboration with Shell Hong Kong Limited.