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Singapore's mass flow meter regulation plans fuel concerns

Singapore's mass flow meter regulation plans fuel concerns
Singapore, the world’s largest ship refuelling centre, is set for an evolutionary change after the local port authority confirmed plans to make the use of mass flow meters mandatory, sparking talks of concern over what would be a regulatory first for the bunkering industry.

The Maritime and Port Authority of Singapore (MPA) has yet to specify a time frame on enforcing the new regulation, but Singapore is to-date the first port in the world to go down the route of making the use of mass flow meters mandatory in bunkering operations.

Singapore's aim of using the mass flow meters is mainly to achieve greater efficiency during the bunkering process and ensure transparency and accurate delivered volumes to fuel buyers, offering a more technologically sound alternative to traditional manual volumetric tank measurements.

However, any introduction of new regulations especially unproven ones, are bound to raise concerns over the operational feasibility and commercial impact on the market.

“The issue is not about the accuracy of the equipment but the acceptance (of the flow meter results) by shipowners. It makes no sense when an equipment is mandatory but the result isn't,” an industry player told Seatrade Global on condition of anonymity, questioning what happens if an owner refuses to accept the result and claims a shortfall in the delivered fuel quantity.

“Will MPA ask suppliers to settle themselves because it is a 'commercial decision'? If it is a 'commercial decision', why do suppliers need to install something that can cost $300,000? This is the major concern of almost all the suppliers,” the player said.

Another supplier agreed that owners might not accept the results of the mass flow meters regardless of the accuracy and therefore a process of creating greater awareness will be a necessary step ahead of mandating the new regulation. “We are going to follow this procedure,” the supplier said. “It is a process that has to come but implementing it within the next one year will not be possible. There are positives and negatives for Singapore and we will have to see how it goes.”

While the digital-accuracy of the mass flow meters is not contested by the industry, Singapore-based bunker suppliers have widely agreed that the port's delivered bunker prices will increase because the “buyback” or shortchange of fuel will not be possible, leading to an inevitable premium that owners will have to pay to get the true amount of oil.

And regionally competitive bunker prices offered in Singapore is perhaps the biggest draw for owners to bunker in the island-state. Losing this key advantage could see owners turn to other Asian ports, especially Shanghai or Shenzhen ports in China. MPA will need to convince as many international shipowners as possible to part with that extra cash in exchange for a fuss-free bunkering. However, cash-strapped owners may not be easy to convince when driving down bunker bills is the key factor to strengthening their balance sheets, as stated in the financial statements of many owners.

It is still early days to envision how the use of mass flow meters will impact Singapore's bunkering industry. MPA should be applauded for leading the global bunkering industry with this technological step up, but smoothening the regulatory process will be a formidable task to achieve.