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'Bad bunkers' hit Panama's marine fuel sales in 2018

Panama marine fuel sales in 2018 were hit by the “bad bunkers” problem that started in the US Gulf region with a 1.8% drop in sales.

Bunker sales in Panama fell by 1.8% to 4.55m metric tonnes (mt) compared to the record 4.63m mt the year before which registered growth of 15.61%.

Sales on the Pacific side decreased by 5.59% to 3.38m mt while they increased by 11.22% to 1.16m mt on the Atlantic side, where bunkering had been on the rise for the past two years.

“Looking at the 2018 statistics in more detail, we can see that bunker sales were overall in a steady decline from March to November, when Panama hit a 29-month low,” commented Raul De Saint Malo, director of Eagle Navigation & Trading, a Panama leading bunker company

“I would explain this falling tendency from March as partly seasonal, however it is clear that after the quality claims debacle beginning in June, customers accelerated this trend by avoiding bunkering in Panama when possible,” he added.

The “bad bunkers” started in the US Gulf in March in the form of 4-cumyl-phenol contamination, which does not show up in standard ISO8217 tests, and then spread to Panama, Caribbean and ports in Malaysia, Singapore, and China affecting hundreds of vessels.

Read more: Bad bunkers cases continue, spread to China

“It is interesting to see that in December 2018, there was a sharp rise in sales again to 388,630 mt, bringing us back to March levels,” he said.

“Even though the availability in Cristobal were rather tight in December, it appears that the clients had regained confidence in the principal suppliers in the market, particularly the Oil Majors,” says De Saint Malo.

The rise in Cristobal of 11% can almost certainly be attributed in large part to one container operator in particular, who markedly increased the bunker liftings there in place of US Gulf ports in the second half of the year, he explained.

The “bad bunkers” problem affected the whole market and clients are scrutinising their suppliers much more than before, which is a good thing, said one bunker operator.

Whether Panama will be prepared for eventually supply LNG to ships as bunkers, is a question that remains unanswered.

Currently there is an LNG storage terminal in the East Atlantic coast of Panama that could be very well utilised to supply LNG to ships ex-pipe and there is a LNG-supply project in the pipeline also on the Atlantic coast with Chinese investors while the Panama Canal Authority is considering putting to tender an area, next to the Pacific Cocoli new locks, for LNG storage tanks.

“It is important to point out that at the moment there are no vessels transiting the Panama Canal that demand natural gas supply for consumption, apart the tankers transporting LNG. But, due to the IMO imposed environmental regulations, this demand could exist in the near future,” commented De Saint Malo.

“Knowing that these tankers consume the Boil Off Gas of their own cargo, they do not have great demand for bunker supply. As of today, the purpose for the existing LNG storage and others being considered is mainly Power Generation,” he explained.

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