Lanka Indian Oil Company to expand bunker sales

Apr 12, 2010 (LBO) - Indian Oil Corp's Sri Lankan unit aims to expand bunker sales by selling fuel to ships passing the island, a much bigger market than the vessels which call at Colombo port, officials said.
With bunker prices falling and the price difference between Colombo and Singapore narrowing, more ships have begun taking fuel in Colombo.

"Ships have started coming to Colombo for bunkers only because they are getting fuel at a reasonably good price," said Lanka IOC managing director K R Suresh Kumar.

Sale of fuel to ships off port limits have also increased in the last six months.

"That's where the volume is," Suresh Kumar told LBO in an interview. "Larger vessels can't come in to the port."

LIOC is looking to supply bunkers to ships sailing past the island on the main East-West trade route that do not necessarily call Colombo to load or discharge cargo.

In January, the company supplied 3,000 tonnes of fuel to a tanker, a parcel so big that the firm had to charter two barges to make delivery off Colombo port.

Port officials said the number of vessels calling Colombo for bunkers only have increased markedly - to 120 last year - compared with only 21 in 2008, 12 in 2007 and just seven in 2006.
Prices in Colombo were so high for long that only vessels that could not get fuel elsewhere bought bunkers at the port.

But after the market was liberalized more than one year ago, prices fell and the difference in price between Colombo and Singapore narrowed to 50-55 dollars a tonne from 120 dollars previously.

The narrower price difference makes Colombo more competitive as a bunkering port and more viable for ships to take bunkers there instead of regional ports like Singapore.

"Colombo is competing with neighbouring ports. Prices in Colombo must be attractive compared with other ports like Singapore, Fujairah or Mumbai," Suresh Kumar said.

Although eight suppliers have got licences to sell bunkers in Colombo only three are active; LIOC, Lanka Marine Services, a former state bunker monopoly that was bought by John Keells Holdings, and Lanka Maritime Services, part of the Sri Lanka Shipping group.

Bunker prices also fluctuate less and total market volumes have increased to about 30,000 tonnes a month today from 18,000 tonnes previously.

source - www.lbo.lk