Asia/Pacific News
Hong Kong's NewOcean Scales Down Oil Business as Banks Freeze Credit
Hong Kong-listed bunker supplier NewOcean Energy has set out how it intends to scale down its oil products business as its relations with the banking industry fray on continued losses.
The company posted a net loss of HKD 170 million ($21.8 million) in the first half of 2021, down from a HKD 1.4 billion loss in the same period a year earlier, it said in an exchange filing on Monday. The firm's oil segment lost HKD 205 million, down from a HKD 658 million loss a year earlier, while oil products sales sank by 59% to about 1.5 million mt.
"Since the group is under debt restructuring and the banks froze their credit facilities granted to the group, the business operations are wholly financed and supported by the internal resources of the group," the company said in the statement.
"Therefore, the group has no choice but to downsize the operation level in current period."
That downsizing will involve a reduced presence in the bunker industry.
"Being all set for the significant scale-down of our oil products business, we are committed to focusing not only on the sales of products with high gross profits, but also on lowering our costs," the company said.
"When the costs of refuelling business in Hong Kong are relatively high, the group will step up its efforts to sell wholesale to our clients who are distributors, and to lease its existing oil tankers to wholesalers or list them for sale."
"As to our business in Singapore, only small portion of its marine bunkering business will remain.
"Meanwhile, the group will take the occupancy of a small portion of the total leased capacity of 300,000 tonnes of floating storage unit, while the remaining part will be leased to third parties for cost saving purposes."
