Know Your Counter Party: Australia Bunkering

Tuesday November 28, 2017

Lower traffic levels and higher bunker prices mean Oceania is one of the world's smaller bunker markets. Like many other niche markets it is somewhere that international buyers typically only bunker when they need to. Buyers therefore tend to be less familiar with these markets, and the fact there also tends to be fewer players operating within them, means that these are the very markets where knowing your counter party can be the most important.

As part of its ongoing Know Your Counter Party series, Ship & Bunker recently talked to Nick Bond, Bunker Broker and Trader at Australia Bunkering Pty Ltd (Australia Bunkering), to learn more about the local market and the company as a whole.

S&B: Can you tell us about Australia Bunkering's origins and history?

Lena Johnston started Australia Bunkering Pty Ltd back on January 29, 2007, bringing the experience of more than 20 years bunker trading in Oceania and to some extent the rest of the world for our Australian owners' demand abroad. We are only 11 years young but have solid foundations in the region, with long-lasting supply relationships, and a reputation of being a one-stop shop for information when it comes to Oceania.

S&B: From those beginnings, where is the company today?

From a very modest start, we have become the leading and by far the largest bunker trading company in Australia, for this market it is quite an achievement.

We provide a full service to the client as is required for the fuel and lubricant needs and assisting in their agency requirements and beyond. To many, Australia is only a small part of their operations, but for us it is our bread and butter. What I mean by this is simply that our clients may only have a few calls here throughout an entire year, thus their knowledge is sometimes limited on what is available. We can take care of these clients with a quick turnaround, providing them with full scope of options and pricing so that they can secure their supply promptly and not need to stress about where they are going to get their fuel.

S&B: Can you tell us about the bunker market in Australia?

Australia Bunkering is a broke and trader operating within the Australian market.

Our key bunker-only ports are Fremantle, Gladstone, Sydney, and Melbourne, with the added ports of Brisbane, Newcastle, and Port Kembla offering 380cst and LSMGO, with 180cst sometimes possible.

Outside of these, many smaller and remote locations are serviced with LSMGO where accessible.

Australia has always been a "top-up" country; you don't ever come down here with the intention to bunker unless you need to, and even then, only the minimum to get you somewhere cheaper.  Australia is simply the last resort for any ship owner or charterer due to the fact it is very expensive to bunker in Australia, especially compared to somewhere like Singapore.

On the plus side, though, we almost never have any quality or quantity issues, in fact it is usually the supplier that will flag a quality issue first on the rare occasion there is one. This helps our clients rest assured that there will almost never be any concern (other than cost) about bunkering here.

Australia volume for marine fuel would is about 2 2.2 billion litres annually in total (IFO + Diesel), with an estimated 1 billion litres in IFO (just shy of 1 million tonnes) and about 900 million1.1 billion litres in diesel (750,000920,000 tonnes) in the marine fuel market.

S&B: Will the 0.50 percent global sulfur cap in 2020 mean any particular challenges or considerations for the local market there?

That is the big question of the moment, to which there currently is no concrete answer. It's still very much in the discussion phase, with suppliers still evaluating the best course of action in order to tackle the issue. Every option is on the table though, whether it be to blend new products, import lower sulfur grades or increase the imports of distillates, each and every possibility is being put under the microscope and calculated – it is just a bit too early to advise the exact direction. 

S&B: What are the Australia Bunkering's plans to accommodate the needs of 2020 and what is your wider vision for the future?

We can only provide what will be available in the market come 2020; however, Australia Bunkering is in a very good position to be supportive to our clients in the sense that we have a strong financial background and we can already cope with what is expected to be a more costly procurement process for the bunkers come 2020.

The current plentiful credit facility will very much tighten up due to the expected higher cost of the fuel. This is where it is important to know your counter party and be confident that they are financially strong and knowledgeable enough to give you the right guidance and support to navigate the stormy waters ahead.