Major Chinese trader PetroChina Singapore has leased fuel oil storage tanks at Port Klang, Malaysia, with intentions to develop that hub into a bunker fuel supply outlet, said trade sources Thursday.
Fuel oil storage capacity at the Port Klang facility is about 220,000 cu m and PetroChina has likely taken all of it, sources added.
The terminal, owned by Malaysia-based private investor Webs Oil Hub, has previously leased storage space to companies such as Petronas and PTT but they have since vacated the space, trade sources also said.
PetroChina's lease likely started this month, and sources say there have already been two Suezmaxes that have discharged fuel oil at the terminal.
While it is not clear whether the lease is long or short term, the terminal has potential in that it is located in an area where there is potential for growth in container port activity, said one industry source.
Previously, Malaysian bunker fuel supplier Ban Hoe Leong was very active as a supplier at Port Klang but the company's activities have quietened down since then.
PetroChina, as a strong bunker fuel supplier in Singapore and other ports in China, would naturally want to expand in that direction and fill that void, sources added.
Potential bunker fuel demand at Port Klang is estimated to have hit a high of 250,000 mt/month previously and is now estimated to be around 120,000 mt/month, market sources also said.
"It is a natural market for bunker fuel supply especially if major container lines pass through Port Klang, with shipping lines such as CMA CGM and China Shipping," said one trade source.
It saves time for those container lines to bunker directly there and not have to wait for Singapore-based barges to travel all the way there before those ships can get bunker fuel requirements, trade sources also said.
With the frequently heavy port traffic in Singapore and very busy terminal berths, having another bunker fuel supply outlet in Port Klang would hopefully ease some of that congestion, they also said.
The storage lease rate is not known at this point but it could well be competitive to other Malaysian terminals, where long-term lease is typically at MR11-12/cu m ($2.80-$3.06/cu m), market sources said.
