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South Africa’s suppliers should benefit from increased port investment

Getting better

A more positive picture for bunkering is starting to emerge in parts of the African markets but there are plenty of challenges ahead

After an eventful few years, the bunkering sector in West Africa has enjoyed a period of settling-in even as the weak oil market continues to batter the region’s economies. Still, with oil prices potentially steadying at a viable level at least for now, both the continent’s oil producers and its principal importers/exporters could see economic strengthening that in turn should drive the sector.

As the international supplier which has weathered the region’s storms the longest to remain its biggest player, with 15 bunker tankers operating along the West African coast, World Bunkering asked Monjasa what the current state of the sector is.

 

“The downturn in offshore oil and gas investments has made its mark on the entire region,” a company spokesman said. “Compared to previous years, demand from supply ships, rigs and other offshore related service vessels has declined during 2016 and 2017. In addition, we see limited growth in overall global trade coming in and out of the region. Overall, the bunker market remains volatile with shifting demands and increased competition.”

 

He remained noncommittal about how exactly the market would shift in the immediate future, though upbeat about Monjasa’s abilities to cope regardless of what changes might come.

 

“It’s still too early to say how the global sulphur cap, which is expected by 2020, will affect the region in terms of shifts in demand, product availability, and pricing,” he said. “As for our own role as a physical suppler, we don’t foresee any challenges in meeting whatever demands may arise from the market.”

 

Monjasa isn’t the only international supplier working the region at present. Swiss-based Augusta Energy opened a dedicated bunkering desk covering both West and East Africa this autumn. The company is offering fuel supply in the Gulf of Guinea from the 7,617 dwt tanker San Padre Pio, and the Mozambique Channel from the 7,518 dwt tanker Prima and the smaller Marine Excellence, as well as operating

a barge in Port Maputo.

 

Augusta Energy joins Singapore-based Sing Fuels in entering the WAF trade. The bunker trader launched operations centered on Nigeria in the middle of August, saying in press reports that existing supply services were “not sufficient to cover the entire market” and describing the move as a “great opportunity” for the company, which is looking to increase its marine fuels earnings by expanding into new markets.

 

In Ghana, meanwhile, the Ghana Oil Company Limited officially opened its new US$15m MGO storage farm at the port of Takoradi this year. The three-tank farm was developed as part of GOIL’s plan to develop the port as a bunkering hub by tackling what the company’s chairman described as a previous deficit of onshore storage in Ghana.

 

GOIL’s managing director and CEO was quoted in local press at the commissioning of the facility as saying: “The supply of the marine gas oil is to meet the expected increase in the number of vessels expected to berth at the harbour. This project, no doubt, will help revitalise the Takoradi Port, energise general economic activity at the harbour and bring back to life the once vibrant Sekondi-Takoradi.”

According to the Ghanaian government, the new storage will

allow for MGO supply ex-pipe rather than being so reliant on

ship-to-ship transfer.

 

Crucial to the success of the bunker trade across Africa and the port state economies on which it depends will be any recovery in the upstream oil industry.

 

After all, if cargo volumes fall due to economic woes, so too do bunker volumes, and West African production in particular is a key economic driver. This summer, Angola’s petroleum minister said that $60 crude would be “extremely important” for sustaining growth in the country, and that there were signs in the market that this value was achievable by the end of the year. As of the time of going to press shortly before OPEC’s annual general meeting in November, Brent crude had just hit that value on the back of the cartel’s production cuts and civil strife in Libya. Moreover, three oil majors – Total, BP and ENI – had come out in favour of maintaining production cuts beyond March and through to the end of 2018 to stabilise prices at a more sustainable level.

 

In South Africa, it’s very much a case of business as you were, with the country’s bunker sector growing on the back of shifts in government policy and interest in the trade.

 

While some local operators are already looking ahead to the possibilities offered by LNG bunkering, aiming to get a head start should supply and supporting infrastructure come on-stream, major suppliers are concentrating on growing their core supply business.

 

Aegean Marine Petroleum entered the market in 2016, offering physical supply at Algoa Bay, making it the first company to offer outside port limits bunkering in the country.

 

Late this summer, Gregory Robolakis, Aegean’s general manager of physical supply operations described the current state of its South African arm: “Since its launch in March 2016, the physical supply station at the anchorage area of Algoa Bay in South Africa has proven to be an excellent option for the replenishment of bunkers for vessels engaged in trans-Atlantic and African regional trades.”

 

“Aegean has made significant investments in our South African operation, which now sees three of our largest and most modern barges, Lefkas (2010-built, 6,321 dwt), Leros (2010-built, 6,311 dwt) and Tilos (2011-built, 6,262 dwt) working alongside our floating storage, the M/T Umnenga (66,985 dwt) to provide customers with top class service levels that guarantee efficient bunkering of vessels at anchorage in the bay of Algoa Bay.”

 

August saw the opening of Cape Town’s new 121,908 cbm fuel storage tank farm at Burgan Cape Terminal. The storage facility is primarily geared towards shore-based and aviation fuels, but the development is part of an overall strategy of improving fuel

supply security.

 

Cape Town port manager Mpumi Dweba-Kwetana said: “With an estimated investment of R890m, the awarding of this contract to a 30% black-owned company in partnership with an international operator speaks strongly to Transnet’s commitment to the Market Demand Strategy (MDS) and the vision of the Operation Phakisa programme of creating capacity ahead of demand and unlocking South Africa’s ocean economy.”

 

Durban is due to see substantial investment over the coming year as well, with plans to build a new cruise terminal – cruise traffic in Durban has more than doubled over the past ten years – as well as an R7bn berth deepening and expansion project to deal with an expected 50% rise in box traffic over the next ten years. Durban’s box terminals are presently struggling to deal with post-panamax vessels, which take up two berths and can only enter the approach channel at high tide due to draft constraints.

Swiss-based Augusta Energy has stepped up its African bunker services

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