Singapore will likely remain Asia’s main oil trading hub despite a growing challenge from countries in the region as they expand their domestic storage and refining investments, according to Jonathan Nonis, Associate Editorial Director at S&P Global Platts. Nonis – who covers the oil products markets in Asia and the Middle East – gave this assessment in an interview in Singapore after presenting an update on oil trading hubs in Southeast Asia and Fujairah at the Platts Singapore Oil Forum in April 2019.
Singapore remains the most important independent centre for Asia’s oil trade, due in large part to its network of 18 onshore storage terminals. Platts publishes live oil product prices based on cargoes stored, traded and discharged from these professionally-managed terminals.
These reported prices have official status as they are used in contracts that underline Singapore’s importance to the oil trade. The terminals are a vital component in the pricing process, ensuring that trades are recorded and can be verified. As recently as the 1980s, when the Asian oil markets were still in their infancy, traders were known to manipulate prices by reporting fictitious deals that could not be verified as the pricing process did not involve the participation of independent storage operators.
Over the past 15 years, Platts has gradually evolved and expanded its FOB Singapore pricing concept to FOB Straits, incorporating storage terminals in nearby Johor state in Malaysia and Indonesia’s Karimun island that comply with its price-making methodology. Storage operators seek inclusion into the Platts system as it is imperative to their survival in an increasingly competitive sector.
Nonis cites the concentration of talent in Singapore as another reason for its competitive advantage in the oil trade.
Speaking to his audience of around 300 primarily Singapore-based delegates, he said that they collectively had 600 years of experience in the oil trade. Singapore’s pool of talent involved in oil trading, storage and financing is unrivalled in other Asian cities.
Shell expands Bukom crude storage capacity
Royal Dutch Shell has added two new tanks to expand its crude oil storage capacity in Singapore by more than 5% to 25.82 million bbl.
The company did not reveal the cost of building the 1.3 million bbl of capacity on the site of its integrated oil refinery-petrochemical complex on Bukom Island. At an industry forum in Singapore in April 2019, Platts said Shell had more than 24.52 million bbl of storage capacity on the island.
In a statement, Shell said the increased storage capacity gives it “greater flexibility to optimise” oil trading activities and supply oil products to its customers “more efficiently and profitably.”
The company said it will continue to invest in...
Written by Ng Weng Hoong, Contributing Editor.
Read the article online at: https://www.hydrocarbonengineering.com/special-reports/06092019/keeping-ahead/