Friday, October 31, 2014

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Singapore first port to require mass flow meters for bunkering

Singapore, the world's biggest bunkering port, intends to eliminate the "cappuccino effect" in ship fuelling by using new meters created to prevent suppliers from short-changing customers.

The Maritime and Port Authority of Singapore, which sold more than 42 million tons of bunker oil in 2013, will be the world's first port to require the use of mass flow meters for fuel oil bunkering.

The meters show the actual amount of fuel delivered, preventing suppliers from boosting their profits by injecting air into the fuel as it is pumped aboard. The "cappuccino effect," is so common that bunker tankers can charge ships less for fuel than the price they pay for lifting the fuel from on-shore oil terminals.

"It happens everywhere - it's a standard play in stealing oil, just that Singapore is the bunkering hub in Asia so it's definitely more prominent," said an Asia-based fuel trader.

Ending the practice comes at a cost, since barges using the meter are charging $2 to $10 per-ton extra for fuel, which takes into account the $150,000 cost of installing each meter.

The meter mandate takes full effect in January 2017, and might push customers out of Singapore, leading to lower sales. But most say any such loss will be short-term.

"I believe volumes would gradually improve as more ship owners would realize the benefits of a secured system that the meter offers when bunkering in Singapore," said Desmond Chong, general manager of Sinanju Tankers.

For more of the Reuters story:

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