September witnessed surged demand dynamics for LNG in Singapore
In September, there was a marked rise in Singapore's demand for biofuel blends and LNG for bunkering purposes. This surge can be attributed to an increasing number of vessels testing biofuels ahead of the European Union's CO2 regulations set for 2024 and the current drop in LNG prices.
The Maritime and Port Authority of Singapore (MPA) data revealed a significant jump in the city-state's demand for biofuel blends for bunkering. It more than doubled to 43,000 metric tonnes (t) in September from just 19,800t in the same month the previous year. In a similar vein, LNG demand surged to 7,710t fuel oil-equivalent, a sharp increase from a mere 950t.
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The upcoming EU regulation will mandate vessel operators operating within the EU territorial waters or traveling to and from the region to cover the costs for 40% of their CO2 emissions. In response, ships commuting between Singapore and the EU have been testing the B24 biofuel blend, which consists of 24% used cooking oil methyl ester (Ucome) and 66% very low-sulphur fuel oil (VLSFO). September assessments indicated that the Singapore B24 biofuel was priced at a premium of $221.5/t or 34% more than the VLSFO average. Various suppliers, including Alpha Biofuels, BP, and ExxonMobil, are catering to this demand.
In terms of LNG, the Southeast Asian variant was valued at a discount of $108.9/t VLSFO-equivalent to Singapore VLSFO in September, a stark contrast to its premium status in September 2022. Several suppliers, including TotalEnergies and Pavilion Energy, are meeting the LNG demand for bunkering in Singapore.
Nevertheless, despite this rising demand, biofuel blends made up only 1% and LNG just 0.2% of Singapore's total marine fuel consumption in September. To provide a broader context, other marine fuels like marine gasoil (MGO), VLSFO, and high-sulphur fuel oil (HSFO) accounted for 3.7%, 57.6%, and 34.5% of the total marine fuel demand, respectively. There was a 15% decline in MGO demand, whereas VLSFO demand remained almost unchanged. Interestingly, HSFO demand saw a substantial 27% rise compared to the previous year.
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According to the article by Procurement Resource, Singapore's biofuel blends and LNG bunkering demand surged in September due to vessels trialing biofuels for the impending 2024 EU CO2 regulations and decreased LNG prices. Biofuel demand more than doubled to 43,000 metric tonnes, while LNG demand rose to 7,710t. As the EU will impose costs on 40% of vessels' CO2 emissions, ships between Singapore and the EU are testing the B24 biofuel blend. However, biofuel blends and LNG represented only 1% and 0.2% of Singapore's total marine fuel intake, with other fuels like MGO and HSFO still dominant.
