Dutch energy giant secures bunker fuel deals as Gwadar emerges as alternative to Gulf ports
In this photograph taken on October 4, 2017, a Pakistani naval personnel stands guard near a ship carrying containers at Gwadar Port. (AFP)
- Vitol Bunkers begins marine fuel supplies after clients seek alternatives amid Strait of Hormuz tensions
- Up to 30 bunker deliveries planned in coming weeks as shipping lines turn to Pakistan’s deep-sea port
KARACHI: Pakistan’s Gwadar Port is poised to emerge as an alternative refueling hub for commercial ships after Dutch energy trader Vitol began supplying marine fuel at the deep-sea port, with up to 30 bunker deliveries to international shipping lines expected in the coming weeks, people familiar with the matter told Arab News on Wednesday.
Bunkering, the business of supplying fuel to commercial vessels, has long been dominated in the region by ports such as Fujairah and Khor Fakkan in the United Arab Emirates.
Vitol Bunkers (S) Pte. Ltd., the marine fuels arm of Netherlands-based Vitol Group, launched operations at Gwadar this week after clients sought alternative fuel supply locations amid renewed tensions around the Strait of Hormuz, raising prospects that Pakistan could establish Gwadar as a regional bunkering hub.
“The customers, after all the Middle Eastern crisis and everything, they are looking for options,” industry sources, speaking on condition of anonymity, said.
“They are not getting credible options at the moment,” they added.
Fresh US strikes on Iranian military targets and Tehran’s threats to disrupt regional energy exports have heightened risks for commercial shipping, prompting some shipowners and charterers to reassess routes, delay voyages and seek alternative bunkering hubs outside the Gulf.
According to Ammar Hussaini, Vitol’s global strategic business manager, Gwadar Port has “benefited from significant investment.”
“We look forward to building our offering in this location and serving customers across the region,” he said, according to a statement published on the company’s website a day earlier.
Hussaini was not available for comment. However, the people familiar with the matter said the company was seeking to position Gwadar as an alternative to existing regional bunkering ports.
“What we are trying to do is to basically present Gwadar as a credible option to the customers,” they said. “If there is an attack in Fujairah, then the customer needs bunkers.”
Pakistan’s maritime affairs ministry spokesperson Muhammad Arshad and Gwadar Port Authority Chairman Noor-ul-Haq Baloch did not respond to requests for comment.
Sources said Vitol Bunkers launched its Gwadar service by supplying 2,500 tons of Very Low Sulphur Fuel Oil (VLSFO) to a liquefied natural gas (LNG) vessel on July 14.
They noted that Vitol has already “locked the future deals” with its clients for supplies at Gwadar.
“In the first 45-50 days, we expect 20-30 deliveries,” they said, adding that shipping traffic at Gwadar would increase in the “coming weeks and months.”
Vitol has multibillion-dollar annual contracts with shipping firms including Mediterranean Shipping Company (MSC), QatarEnergy LNG and Compagnie Maritime d’Affrètement Compagnie Générale Maritime (CMA CGM).
The company plans to supply different varieties of fuel to customers in Pakistan using feedstock from local refineries. It currently operates two barges — or floating vessels used to supply fuel to ships — and has the capacity to supply up to 50,000 tons of bunker fuel per month.
“We expect Gwadar to become active in the bunkering space in the coming weeks and months,” said people familiar with the matter, adding that the company would initially load fuel in Karachi and deliver it to Gwadar until permanent storage facilities were built at the port.
Pakistan Ship’s Agents Association Chairman Muhammad A. Rajpar described the development as a “groundbreaking achievement.”
“This crisis around the Strait of Hormuz has delivered an opportunity,” he told Arab News.
Rajpar said Gwadar would compete with established bunkering ports including Singapore, Fujairah, Colombo and the Indian ports of Deendayal and Mundra.
“Our main competitor will be Fujairah,” he said, adding that Gwadar’s location and lower port charges would make it a more economical option.
“We will have to build storage facilities to make it a bunkering port,” he said.
Former Gwadar Port Authority Chairman Dostain Jamaldini said the port’s location at the mouth of the Strait of Hormuz gave it a natural advantage over existing Pakistani ports.
“Gwadar Port would be highly convenient for vessels, as they can take on bunker fuel without entering the Strait of Hormuz while en route to the Pacific Ocean or China,” he told Arab News.
He added that Gwadar was also closer to the Strait of Hormuz than Port Qasim and Karachi Port for vessels sailing from the Red Sea toward the Indian Ocean, suggesting that Pakistan could also cooperate with Iran to expand the business.
“Since we have a sister-port agreement with Chabahar in Iran, we can also integrate this bunkering business with the Iranian port and can jointly make a lot of earnings,” he added.