Euronav’s agreement to base an ULCC at anchorage in Malaysia’s Kuala Linggi International Port (KLIP) has brought the port’s dream of offering bunkering to fruition.

Euronav chief operating officer Alex Staring, speaking to TradeWinds in Kuala Lumpur last week, noted that his company’s 441,585-dwt Oceania (built 2003) had already supplied 20,000 tonnes of fuel to 15 vessels since dropping anchor at KLIP the month before.

The project, which will serve as a floating bunker storage vessel supplying low-sulphur fuel to the Belgian shipowner's own tankers, has been long in the making, with the port and owner having begun work on it in late 2018. After being prepared for its new role, the Oceania spent most of this year in the Mediterranean receiving parcel cargoes from product tankers.

Staring was quick to praise the benefits of using KLIP as its Asian bunkering hub.

“For us, KLIP is unique," he said. "Where do you find on this earth a place so close to the busiest shipping lane in the world that can provide all the services needed? The neighbour [Singapore] of course, but the neighbour gets extremely congested.”

Staring expressed confidence in KLIP operator TAG Marine, which he said has a professional organisation that allowed Euronav to feel secure.

“We have the proper resources available in case of calamities," he said. "There is the support from the big tugs to handle the big ships, and we can do ship-to-ship services and crew changes. We are very close to Kuala Lumpur International Airport, which is connected to the world. There are a lot of benefits in this case for us as a ship operator."

The Oceania arrived from Europe loaded with a 420,000-tonne cargo of IMO 2020-compliant fuel sourced from refineries in Europe and the US.

Staring told TradeWinds that Euronav had paid an average of $448 per tonne for the fuel — totalling $188m.

Alex Staring, chief operating officer of Euronav Photo: Jonathan Boonzaier

He estimated the price differential between that fuel and high-sulphur fuel to have been in the region of $30 to $50 per tonne when purchased.

“We bought it wholesale rather [than] retail, which gave us a significant price advantage. Yes, it is big cash outlay, but we consider it as buying forward. We would have to spend that money on bunkers anyway,” he said.

The fuel purchases were funded in part by a $100m loan that Euronav said it had secured with core European lenders in preparation for IMO 2020 and in particular its fuelling strategy for its fleet.

Euronav’s intention is to station the Oceania permanently at KLIP. Its tanks will be refilled as needed via ship-to-ship transfers from other vessels. The current supply is expected to last nine months.

Bunkering operations are being undertaken by a bunker tanker that Euronav has chartered in to transship the fuel to waiting vessels.

Staring explained that Euronav would be evaluating the operation over the next few months before deciding on whether to expand it further. While the company will at first be supplying only its own vessels, including those managed by third-party managers, it does not rule out the possibility of selling bunkers to ships owned or operated by other companies in the future.

Euronav’s move to procure, store and supply its own bunkers is believed to be a first for a shipping company, and KLIP’s management is hoping that others might follow, together with bunker traders and suppliers.

TradeWinds understands from bunker industry sources that the port is offering an extremely favourable fee structure to entice them to come.