INTERVIEW: Monjasa Completes First Biofuel Blend Delivery in Singapore

The firm recently bunkered Yang Ming's 14,220 TEU container ship the YM Wonderland with 2,000 mt of a B24 blend in Singapore. Image Credit: Monjasa

Global marine fuel supplier and trading firm Monjasa has carried out its first biofuel blend delivery in Singapore, and expects to see growth in demand for the alternative fuel at the world's largest bunkering hub next year.

The firm recently bunkered Yang Ming's 14,220 TEU container ship the YM Wonderland with 2,000 mt of a B24 blend in Singapore, Morten Jacobsen, managing director for Asia at Monjasa, said in an interview with Ship & Bunker last week.

The company used their delivery vessel Radiance for the operation. Monjasa first announced plans to operate bunker tankers in Singapore last summer.

Biofuel Growth

The firm sees growing demand for biofuel blends in Singapore.

"We definitely see more interest in biofuels, among other alternative fuels," Jacobsen said.

"So far it's mainly been the container lines who have been taking biofuel deliveries.

"We have been waiting for opportunities to engage with biofuel deliveries, and therefore it made sense for us when Yang Ming started to ask for biofuels.

"It was having our own fleet here in Singapore that allowed this to happen."

Demand may start to emerge from other segments beyond the container fleet, the company believes.

"The expectation is that next year we're going to see more and more demand here," Jacobsen said.

"We're definitely getting more interest.

"There's a key driver that might be holding the demand back -- the price -- at this given point in time, at least, but we definitely see a bigger interest in it.

"We also expect to see more demand from other segments; but when that exactly is going to come we don't know, other than that we are quite confident that it will come sometime next year."

The EU's FuelEU Maritime regulation is set to come into force from the start of next year, requiring shipowners operating in Europe to include a fixed percentage of low-carbon fuels in their energy consumption. This is likely to be a significant driver of biofuel bunker demand, both at European ports and elsewhere in the world.

"That could definitely have a positive demand effect for Singapore, particularly because we expect the shipowners to bunker biofuels in ports where trade flows and product availability are well established, and that would be the case in Singapore," Jacobsen said.

Demand Levels

Singapore averaged about 48,000 mt/month of biofuel sales in the first half of the year, or about 1.1% of total bunker sales in the city-state's waters.

That compares to an average at Rotterdam of about 83,000 mt/month over the same period, or 11.9% of the Dutch port's total demand.

Singapore's conventional bunker sales are typically about five times as large as Rotterdam's. But it's too early to say when Singapore's biofuel sales might overtake those at the Northwest European hub, Mortensen argued.

"There will be speculation over if and when Singapore will do that, but it would be pure speculation, guessing," he said.

One factor that might bring more demand to Singapore would be lower prices. B24 blends in Singapore currently trade somewhere in the low $700s/mt, versus VLSFO prices somewhere in the low $600s/mt.

The EU has recently announced it will impose tariffs on cheap biofuel imports in China, which will be likely to raise biofuel prices in Europe relative to the rest of the world.

"We still have to see exactly what the effect is, but it could be that biofuels in Asia will grow faster compared to Europe," Jacobsen said.

"The quality of the origin of the biofuels is also essential to customers, which is the reason why we became ISCC-certified some time ago, but it could definitely drive good demand out here in Asia, and faster than in Europe."

While some have forecast a shortage of biofuels as more and more industries start to compete for limited supply, there are no signs of this emerging yet in Singapore, Jacobsen said.

"We don't see a shortage in supply for Singapore right now; there's plenty of biofuels," he said.

"That's not an issue for biofuels, and we don't expect that to happen in the near future."

The B24 blend that Monjasa sold to Yang Ming has become the default for Singapore's market, as local regulations allow only biofuel content of up to 25% to be handled on conventional bunker barges.

Some other suppliers have started to order chemical tankers that would be allowed to handle biofuel blends up to 100%. Monjasa is open to the idea of following suit, Jacobsen said.

"We constantly observe and navigate in the market, and would definitely like to engage more and be considered at the forefront when it comes to alternative fuels," he said.

"So yes, that could definitely be in the talks in the future, if there's demand for it.

"So far, we have not seen the demand.

"I'm fully aware that certain supplies have been done, and we're seeing tankers coming in, and that could be something we would be interested in looking into, as well as other products in the future."