"Rare" Fuel Oil Shipment from Japan to Singapore

The Silver Bridge, in Sydney sailing under its previous name Century River

Royal Dutch Shell PLC (Shell) is moving 80,000 tonnes of fuel oil to Singapore from Negishi in Japan in a move that news agency Reuters described as "rare", with China being a more usual destination.

In May 2008, the Nippon Oil Corporation (NOC) and PetroChina Company Limited (PetroChina) established a joint venture to operate a 115,000 barrels per day refinery in Osaka to help feed growing demand for oil in China.

Fixtures reports, including those published by integrated shipping services provider Clarkson PLC (Clarksons), shows that Shell have chartered the Marshall Island flagged Silver Bridge vessel to move 80,000 tonnes of fuel oil from Negishi with a lay date of May 16 at a freight rate of $500,000.

Traders were quoted speculating that there could be a supply imbalance in Shell's system, or that it was simply a backhaul vessel, with the source noting that the "current market rate for vessels along the Singapore/Japan route is about $800,000."

A Retuers source said the cargo was "likely to be low-density bunker-grade fuel oil."

Analysts are predicting increased fuel oil demand in Japan over the Summer, as the island nation looks for alternative sources of power following the closure of its nuclear power plants.

But the bulk of that demand is likely to be for low sulfur fuel oil to keep in line with local regulations on emissions.

Upcoming sanctions against Iran meaning shipowners will lose P&I cover for carrying bunkers or cargoes of Iranian origin have meant Fuel oil shipments in Singapore have recently come come under scrutiny.

With analysis observing that as oil from the Islamic Republic is often blended with cargoes from various international origins, buyers in Singapore are going out of their way to make sure all of their oil comes from Western approved sources.