17-06-2016

“Bunkering Potential at Indian Ports’’ Mr. Manoj Tondon, General Manager & Head Marketing , Adani Bunkering Pvt. Ltd.

MT

The challenges, initiatives to tackle them and the potential of Bunkering in India were covered in the talk on “Bunkering Potential at Indian Ports’’ by Mr. Manoj Tondon, General Manager & Head Marketing, Adani Bunkering Pvt. Ltd. In The Dry Bulk Cargo Summit 2016 organized by The Shipping Tribune. Areas and issues of major concern were talked about in his talk in the presence of major industry leaders.

Starting with a general analysis from the shipping outlook, “The Shipping industry is likely to witness significantly low growth in demand particularly due to China’s economic slowdown, low global growth forecasts further point to a dismal demand outlook for 2016. This worrying scenario is likely to be further exacerbated by an expanding supply of fleet capacity that shows no signs of slowing down. As a result, supply is set to outpace demand, leading to significant freight rate reductions in the coming year. In the light of potential declines in shipping rates, buyers are likely to shift to spot-rate-based contracts with short-term durations to derive maximum benefit in this situation.”

Coming to the bunkering side, “In India we are doing only almost a million tons of bunkering annually, as against Singapore which is almost 42 million tons annually and Rotterdam is 18 million tons. In India, the bunkering per se is not the industry which has caught the fancy of a lot of people. In fact, in 2008 Adani Bunkering in a joint venture with Chemoil, started this business and slowly and steadily we have grown and we are almost close to 50% of the market share in Indian ports. We are basically supplying from Gujrat ports and we are also helping the shipping companies to take bunker at other Indian ports as well.

The current bunker market in India is almost close to one million tons. India’s GDP is expected to grow at 7.4% but as it is known that growth in GDP may not be the actual reflection of increase in bunker consumption in India. Although we expect that shipping industry is likely to show growth of 6-7%, we are expecting vessel traffic to increase by 4.8% which as of now is not visible but we expect it should in the next coming months. Hypothetically if 30% of vessel traffic start taking bunker in India, the bunker projected market by 2020 will be approx. 18 MMT or more. The Indian bunker suppliers are meeting all the fuel specifications which are meeting all the international specifications of IMO.

Below is a graph, where I have highlighted the various ports and all the facilities and products that are available right now. We can see that, In Mundra we are having a pipeline supply otherwise all the ports we are able to, not only Adani but the industry per se can supply by barges, can supply by tank lorries and practically at all ports all the grids of bunker fuels are available.”

The bunker industry in India is facing some challenges, as Mr. Manoj Tandon said in his talk,

” First is the pricing competition because our geographical position is such that we are competing with both Singapore and Fujairah markets. The low resource utilization is resulting in high fixed costs because our position is such that we have to import a product which is adding to the cost of the final product which we are selling to the ship owners.

High taxation is another issue which to a certain extent has been addressed but remains very high in some states.

Infrastructural Issues, bunker set ups are at important ports like Paradip, New Mangalore and Tuticorin, the facilities are very minimal over there. The Indian ports do not have much of pipelines at Jetties & Bunkering terminal. Wherever the pipelines are available the pumping rates are very low which are sub-optimal and which are not very suitable for economic pumping.

Procedural Challenges are also there, documentation takes time because of the various custom regulations and there is no standardization of custom documentation at all ports. At different ports the documentation procedures are different.

For Outside Port Limit Bunkering, the custom policies are not very clear. At some ports it is permitted, at some ports it is not permitted.”

Moving on to some of the initiatives which the industry has taken to improve the bunkering in India, as he pointed out categorically,

Ports support for promoting bunkering

  • We expect various ports to rationalize the tariffs to promote OPL bunkering.
  • Provide bunkering facility beyond daylight, at some ports only daylight bunkering is allowed and night bunkering is not permitted.
  • Providing elite services for vessels
  • Bunkering along with cargo operations, again at some ports it is permitted and some ports it is not.

     So if we take all of these things into account, probably we can increase services of bunkering to the       shipping industry.

Government initiatives

  • The latest guidelines for offering Bonded bunker to vessels on coastal run is for container vessels only. And we expect if it is extended to others also it will help bunkering industry as well as to the shipping industry.

 

      Infrastructure development

  • Development of modern dedicated bunker tankages at Indian Ports. Indian ports unfortunately do not have the concept of having tankages at places which are close to the waterfront, which is not giving a very positive way to develop the business over here.
  • Development of pipeline bunker delivery system at ports. Most of the ports do not have pipelines, in fact so much so that the barge loading facilities limited at various ports.

As Adani is into port business also we are taking account all these things, our experience of Mundra so that we can incorporate these in our new ports.”

Talking about the future of LNG as the next fuel option, “LNG is now slowly and gradually become popular in Europe in the Emission control region. It is a good solution, it is environmental friendly, it has also got some economical advantages on calorific value basis even high Asian LNG prices are lower than the bunker fuel prices. So, in times to come it looks like LNG once the prices are competitive we have alternative solution for bunkering fuel.

Now due to potential advantage of LNG as a bunker fuel and at pace of recent development the probability of LNG displacing, oil as the preferred fuel will continue to increase.

       LNG as a bunker fuel faces number of challenges,

  • Investments, it is a very high investment area.
  • Development of new international safety regulations

 He concluded the topic with introducing another alternative, “In spite of challenges faced, to what extent can LNG as a bunker fuel develop, time will decide. Likewise, other than LNG we have got scrubber technology which is also there for clean fuel and in some regions some of the ships have shifted over to scrubber technology but then it has got cost and some other implications. With prevailing prices of fuel oil, scrubber technology looks to be one of the possible solutions. 

Source: Kavita Mishra 

 

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