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‘Make Sabah a ship bunkering hub first’

Monday, 28 October 2019 | 01:00

Kota Kinabalu: If Sabah aspires to be a “Shipping Hub for the Far East”, at least one key port in Sabah is expected to be ready and be available as a bunkering hub to supply ships with low sulphur bunker fuel by 2020.

Sabah, which is producing offshore gas that can be converted into commercial liquefied natural gas (LNG), considered a clean fuel for ships without any sulphur residues or air pollution discharge, has an advantage if Petronas is helpful. LNG is emerging as a strong contender to the traditional bunker fuel.

The International Maritime Organisation (IMO) will cap global sulphur content in marine fuels at 0.5 per cent from Jan 1, 2020, down from the current 3.5 per cent. This applies outside the designated emission control areas where the limit is already 0.1 per cent.

Sabah should be ready for this IMO’s global sulphur limit rule for marine fuels and have sufficient low sulphur fuel oil (LSFO) to meet upcoming demand by ships.

“Make Sabah a bunkering hub first, if Sabah aspires to be a ‘Shipping Hub for the Far East’,” said John Lim, one of the ‘Unlocking Potentials in Maritime Transport and Services’ session speakers at the recent 2nd Sabah Port Forum 2019 at Magellan Sutera Harbour Resort.

“Is Sabah strategically positioned in the global maritime corridors? Are there opportunities to make Sabah a hub?” he asked, citing on the State’s strategic location and its potential of being a hub for trading and investments.

Lim, who is the Managing Director of CMA CGM Malaysia Sdn Bhd, said: “Sabah is not on the main shipping route. There is this urgent need to make Sabah sufficiently attractive to the vessel owners.

“As a bunkering centre, are LNG, LSFO options available today?”

Bunkering refers to the supply of fuel for use by ships which includes the shipboard logistics of loading fuel and distributing it among available bunker tanks.

The term “bunkering” originated during the days of steamships, when fuel, coal, are stored in bunkers.

By 2020, ship owners will have to either burn cleaner, more expensive fuels or install scrubber units for burning high sulphur fuel oil according to International Maritime Organization’s (IMO) global sulphur limit rule for marine fuels. Over 95 per cent of global shipping companies are to utilise LSFO.

The new global sulphur cap represents a complete transformation in marine transport shipping companies to evaluate their compliance options based on economic and operational factors.

Currently, Port Klang and Tanjung Pelepas supply about 4 million mt of marine fuels to ships calling these ports.

The bunkering services industry in Singapore was valued at RM2 billion in 2017 but Malaysia’s market size is estimated to be at least three times that of Singapore, worth about RM6 billion.

Petroliam Nasional Bhd (Petronas) is poised ready to provide LNG bunkering services by Jan 1, 2020, in support of the government’s ambition towards making Malaysia as a bunkering hub.

Its vice president LNG marketing and trading Ahmad Adly Alias said as one of the world’s major LNG producer, the national oil and gas giant is well-positioned to develop the cleaner LNG as the fuel of choice for the industry as it emits zero sulphur when burnt.

According to Lim, with more vessels calling at Sabah, there will be spill over economic benefits and promoting the growth of ancillary services like warehousing for ship spares and regional distribution centres.

“Three main line container operators do not make a hub. Worldwide connectivity and options are needed.”

“Currently limited feeder operators and carriers calling at main ports of East Malaysia as there are only four local operators. Three main line operators are calling at selected deeper water ports.”

“Do you develop industries first or do you develop the ports first?”

He noted the slow SME growth, with KKIP touted as a containerised export location was undone as it is still an import imbalance area.
The government had not done much in the past and hence Sabah is now in such a position today, Lim said.

“No or limited berthing windows in most ports due to limited development done in past years.”

Matters to be addressed by ports include the identification of issues related to bunker supply and demand, licensing of service providers, integrity aspects including quality and quantity of fuel, competency of personnel in the bunkering industry, and construction and operational standards of bunker vessels.

This is more realistic to be able to attract shipping to come to berth for low sulphur bunker fuel besides increasing loading and unloading cargoes as port like the Sapangar Bay Container Port aspiring to be a shipping hub for the Far East.

Sulphur limits in fuel oil used by ships operating outside designated emission control areas (Seca) will be further reduced to 0.5pc m/m effective Jan 1, 2020, in effort to promote health and environmental benefits for populations living in port and coastal areas.

The International Maritime Organisation’s (IMO) regulation to reduce sulphur oxide (SOx) emissions from ships first came into force in 2005 under the International Convention for the Prevention of Pollution from Ships (Marpol) Annex VI – progressive reductions have been effective since then.

There is a need to raise awareness and facilitate compliance and implementation of the requirements on impacts of the global sulphur cap, and issues related to fuel oil availability, handling of new fuels, sampling and verification procedures, compliance challenges, mitigation of safety aspects as well as enforcement.

Equal emphasis should be given to formulating government policies that will spur and stimulate the industry given the huge economic spin-offs that can be derived from the bunkering industry.

There’s also a need for port authority to satisfy economic demands and industrial activities in line with sustainable developments, compliance with rules and regulations, and risk reduction as ports aimed to promote safety, health, and environmental agendas in their day-to-day operations.

A better working environment should be established that will benefit both port workers and their customers.

There is an urgent need for ports to provide recent and reliable information regarding its sustainable development in order to enhance international competitiveness and fulfil national obligations to the IMO requirements for safe, secure, and efficient shipping on the seas and oceans.
Source: Daily Express

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