Reprieve for VLCCs off Pasir Gudang as owners search for alternative sites
Business Times 2 Sep 11;
(SINGAPORE) Seven floating oil storage facilities off Southern Malaysia have been given a two-week reprieve from eviction as required by a government notice that expired a day ago, industry sources said yesterday.
The reprieve for the converted Very Large Crude Carriers (VLCCs), which have a capacity to hold up to about 1.9 million tonnes of crude and fuel oil, off Pasir Gudang port could be extended to a month, as had been requested by the owners of the facilities, they added.
Alternative sites being discussed currently include another spot off the town of Linggi, further north and along the country's Western coast, as well as to existing Ship-To-Ship (STS) transfer locations in Indonesia, such as Karimun and Nipah.'The search for alternatives is still ongoing, with three possibilities having been identified, and it will take a little bit more time for the operators and their clients to decide where to go to,' a Singapore-based Western trading source said.
'Right now, there isn't any perfect solution and there aren't any other alternatives. So, the parties must decide what to do next and get on with it quickly, before the extension runs out.
'Malaysia's Transport Ministry had served the quit notice on the operators of four crude and three fuel oil storage facilities, including Hong Kong-listed Titan Petrochemicals, at Pasir Gudang, the site of floating storage for at least 8-9 years.
The notice was driven by the Malaysian authorities' desire to improve access along the shallow south-eastern waterway that separates its Johor state and Singapore and that has been earmarked for major development of the country's oil infrastructure. At least two major projects are planned in the area, including Petronas' proposed 300,000 barrels-per-day (bpd) refinery and Royal Vopak's new terminal, with a capacity of 1.3 million cubic metres (cu m), both near the town of Pengerang.
Two land terminals are also already operating in the area: Cosco Feoto's 200,000-cu m facility in Pasir Gudang and another 500,000-cu m plant in Tanjong Langsat, occupied solely by Trafigura.
In addition to the seven floating facilities in Pasir Gudang, another nine tankers, holding about 2.7 million tonnes fuel oil and crude, are currently anchored off the port of Tanjong Pelepas in the southwestern tip of Malaysia.
A 10th tanker, the Brilliant Jewel occupied by Vitol, has moved into Tanjong Pelepas from Pasir Gudang.Traders said there are only two spots left in the area, and one has already been taken by the Vitol facility, which is mainly storing fuel oil.Traders said the Linggi site is more suitable for crude storage, rather than fuel oil, because its distance to Singapore, the world's largest bunker port by volume, adds about half a day of travelling time and makes it more inconvenient for barge operators to pick up supplies.
The Indonesian options are also not seen as feasible because both locations are currently only used for STS operations where tankers stay short term for a maximum of about a month. There are also tax issues relating to bringing cargoes on board, resulting in punitive costs.
'None of the current options are ideal. All will incur extra costs for the charterer, although the Malaysian option is better for the crude guys, as they do not necessarily need to sell their cargoes southwards,' another trader said.
'In some case, the location might even be better, but for the fuel oil guys, the extra travelling time can be a big problem, and time is money for their customers.
'Demand for the floating facilities has grown tremendously over the past 7-8 years, the industry's major players such as Vitol, Glencore, Mercuria, ConocoPhillips and Trafigura, among others, taking up space in the two locations. -- Reuters
Oil floating storage off Malaysia given reprieve on eviction
Reuters 1 Sep 11;
SINGAPORE, Sept 1 (Reuters) - Seven floating oil storage facilities offshore Southern Malaysia have been given a two-week reprieve from eviction as required by a government notice that expired a day ago, industry sources said on Thursday.
The reprieve on the converted Very Large Crude Carriers (VLCCs), which have a capacity to hold up to about 1.9 million tonnes of crude and fuel oil, off Pasir Gudang port could be extended to a month, as had been requested by the owners of the facilities, the sources said.
Alternative sites being discussed currently include another spot off the town of Linggi, further north and along Malaysia's western coast, as well as existing Ship-To-Ship (STS) transfer locations in Indonesia, such as Karimun and Nipah.
(Reporting by Yaw Yan Chong; Editing by Miral Fahmy)
