Singapore's port authority says little disruption to fuel oil supply here after OW Bunker's bankruptcy

The sign in front of OW Bunker headquaters in Aalborg. One of Denmark’s largest companies, ship fuel supplier OW Bunker, on Nov 7 filed for bankruptcy after saying it had discovered a $125 million (100 million euros) fraud at its subsidiary in Sing
The sign in front of OW Bunker headquaters in Aalborg. One of Denmark’s largest companies, ship fuel supplier OW Bunker, on Nov 7 filed for bankruptcy after saying it had discovered a $125 million (100 million euros) fraud at its subsidiary in Singapore. -- PHOTO: AFP

The Maritime and Port Authority of Singapore (MPA) said on Tuesday that, based on its assessment, there will be minimal disruption to bunker supply in the Port of Singapore following the bankruptcy of the world's biggest supplier, Denmark's OW Bunker, due to suspected fraud at its Singapore subsidiary

There are currently more than 60 bunker suppliers in Singapore, and OW Bunker Far East (Singapore) Pte Ltd accounted for less than three per cent of the 42.6 million metric tonnes supplied here in 2013. Bunker is any type of fuel oil used by ships.

MPA added that it is is working with the industry and the industry associations to mitigate any potential impact on bunkering operations in Singapore.

To address any concerns from the industry, MPA is working with the Singapore Shipping Association (SSA) and the International Bunker Industry Association (IBIA) to conduct dialogue sessions shortly.

MPA said it will also work closely with the various stakeholders to ensure that bunkering operations in Singapore continue as smoothly and normally as possible.

OW Bunker collapsed under the weight of losses of more than US$125 million at Singapore-based Dynamic Oil Trading, which pushed its debts to US$750 million and prompted banks to refuse to extend further credit. The company, which filed for bankruptcy in Denmark on Friday, has blamed fraud by unnamed senior employees for the losses at Dynamic Oil, but has not revealed any details.

Fuel traders have said that OW Bunker's bankruptcy and other problems in the sector have set off a scramble of fuel buyers attempting to find alternative sources to make up for failing deliveries, and that other companies could also be at threat over unpaid bills.

Industry sources told Reuters that at least half a dozen companies had an exposure of more than US$10 million to OW Bunker.

Benchmark fuel prices, which have plunged by almost a quarter in the last two months, rose nearly 1.5 per cent on Monday. But traders said the disruption to supplies will likely be short-lived and outright fuel shortages were unlikely because of ample global production and a widespread base of suppliers.