Malaysian state-owned Petronas conducted its first LNG bunkering operation at Pasir Gudang, in the southern Malaysia Johor state, ratcheting up competition with neighbors Singapore and further away Bontang, site of LNG production in Kalimantan, in the race to become an LNG bunkering hub in Southeast Asia.

The operation involved ship-to-ship (STS) LNG bunkering transfer from Petronas' first LNG bunkering vessel the MV Avenir Advantage to vehicle carrier SIEM Aristotle on Nov. 9, according to a statement from the Malaysian marine department.

The 7,500 cubic meter barge transferred about 1,150 mt of LNG during its first such operation. LNG STS bunkering operations typically amounts to about 1,000-2,000 mt of LNG being pumped into the receipt vessel tank, although it could increase to 8,000 mt for bigger vessels, an LNG bunker supplier said.

The MV Avenir Advantage is set to offer LNG bunkering and related services in Malaysian waters going forward, JLM said.

Singapore and Indonesia are also vying to snag the LNG bunkering hub title.

LNG bunkering capacity in Singapore is expected to hit 1 million mt/yr by 2021, a Singapore minister said at an energy conference last month, with its Maritime and Port Authority (MPA) due to issue additional LNG bunker supplier licenses.

Temasek-owned Pavillion Energy said in an earlier statement that it had conducted its first commercial STS LNG bunkering in Singapore in May 2019, reloading 2,000 cubic meters of LNG onto a smaller tanker, followed by an STS transfer to a receiving heavy-lift commercial vessel.

Meanwhile, Indonesia's Bontang LNG was also heard to be making early stage offers to market LNG bunkering fuel and services together, a shipping source said, although this could not be immediately confirmed.

The three most important factors for the development for an LNG bunkering hub are proximity to popular trading routes, LNG molecule prices, and administrative fees, which most prominently feature transfer fees and local port charges, shipping and bunkering sources said.

For instance, Singapore and Pasir Gudang are along the busy Straits of Malacca, connecting the West to East, also the shortest route connecting the Indian Ocean and Northeast Asia, unlike Bontang in Indonesia, which is located furthest away from this shipping route, with Bintulu in East Malaysia also thrown in the mix, according to the sources.

LNG prices will likely be the lowest at the Bontang LNG production plant, allowing Indonesia to undercut their competitors by slashing their eventual bunkering rates, they added.

Transfer fees and local port charges also vary greatly from port to port, sources said, and will add up to the total LNG bunkering operations costs.

There are currently no published rates on these charges, the sources said.

 

--Reporting by Kintan Andanari, Kintan.Andanari@ihsmarkit.com;

--Editing by Carrie Ho, Carrie.Ho@ihsmarkit.com, Raj Rajendran, Rajendran.Ramasamy@ihsmarkit.com

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