World Bunkering > News > Autumn 2011 > Black Sea - Expansion mode

RUSSIA

The provision of bunkers at Russia’s principal Black Sea Port, Novorossiysk, is currently a controversial area with Russia’s Federal Antimonopoly Service (FAS) conducting an investigation into the local marine fuel market.

An official press release said: “FAS has initiated a case of abuse of market dominance against OJSC IPP (part of the Group of companies PJSC Novorossiysk Commercial Sea Port, NCSP) for violating Article 10 of the Law on Protection of Competition.” The company in question owns the sole oil terminal at the port. Whatever the outcome of the investigation it seems clear that bunkering activity at Novorossiysk, and also bunkering based there at but delivered offshore, is set to continue increasing as the port itself expands. Novorossiysk Marine Commercial Port is currently implementing a US$200 million investment programme. Also plans are in hand for a new fuel oil terminal in a joint venture between the Russian oil pipeline giant Transneft and the Swiss-based oil trading company Gunvor.

In April, local physical supplier Era Bunker completed the modernisation of its largest tanker, a 3,000 dwt vessel used for distillate, whilst two 1,000 tonne barges supply fuel oil. Meanwhile, another major player Evrasia Bunker supplies in the port itself and its anchorage by barge, at Novorossiysk’s Sheskharis Oil Terminal, ex-pipe, during cargo operation for tankers only, at three locations in the Russian side of the Kerch Strait and at Port Tuapse.

ROMANIA

The Romanian bunker scene has become significantly more competitive over the past year as two new players entered the market, bidding to supply a potential market of some 800 ships a month. The biggest supplier is private sector company UN ICOM, which was set up some 10 years ago. It is part of a group of private companies, founded in 1996, with interests in railways, energy trading, cargo forwarding, trading and transportation of oil products. It owns oil terminals in Galati and at Drobeta Turnu-Severin on the Danube. The group has an annual turnover of more than E500 million a year.

UNICOM’s bunker manager Bogdan Burgui says: “We deal with bunker enquiries coming for all four Romanian Black Sea Ports (Constanta, Agigea, Midia and Mangalia) and we also have a very strong position in the inland bunker market, on the Danube.” He continues: “Basically, we have about six to eight enquiries per day on average, and that is fairly good. In terms of volumes, the average enquiry for gas oil is around 30 tonnes, 100 tonnes for fuel oil grades between 30 cSt and 120 cSt, 150 tonnes for IFO-180 and 400 tonnes for IFO-380.”

“Competition in this market is tough these days,” says Mr Burgui, “as two players entered the market last year. This battle for market share has made the customers happy, as they obtain better prices, but it has also squeezed the margins very much. This has meant every player having to change their strategy. In these days of economic crisis, bunker expenditure has become more and more important in every shipping company’s budge. Price now plays a more important role in the purchasing decision than in the earlier years, as the freight rates and the number of voyages have decreased.”

“On the other hand,” he says, “these lower prices have persuaded more ships to bunker at Constanta for bunkers only and the total bunker market increased from about 8,000 tonnes a month, supplied to 50 ships, to about 20,000 tonnes, supplied to about 180 ships. This level is 40% higher than before the start of the financial crisis, when our company was the undisputed physical bunker supplier at these ports, with more than 90% market share.”

He notes that 70% of ships operating in the Black Sea are tramps, and Russian ports compete strongly for their business. The Romanian suppliers cannot match the Russian prices. Mr Burgui says his company is working with its suppliers to fully implement ISO 8217:2010 by the end of the year. Also, in another sign of the times, UNICOM started supplying low-sulphur fuel oil mainly 180cSt 1.0% sulphur – earlier this year and it says it is the only supplier in the region who can offer low-sulphur high-viscosity products.

Mr Burgui says: “There is demand for low-sulphur fuel oil but it not great right now. But having in mind all impending IMO and EU regulations, we want to be ready to fulfil our customers’ needs.” He is optimistic about his company’s prospects, saying: “We look with confidence to the future, and we will do our best to support the shipping community when it comes to bunker in Romanian ports.” He adds that he believes that, following the hits that shipping has taken during the economic crisis, it is now in a period of recovery.

TURKEY

The competitive situation in the Black Sea is often seen as a battle between Turkey – primarily Istanbul – and the other Black Sea countries.

Energy Petrol head Mustafa Muhtaroglu says the real situation is rather different and that Turkey is willing to grow together with the other countries in the region, especially Russia. He does not deny that there is is strong competition in the region. He says: “By nature, every port competes with each other in bunkering. When a ship orders bunker at one port it means other ports lose the business. In this regard, we do compete with all ports in the area. Depending on ships’ routes, we compete with Pireaus, Malta, Suez, Syros and Kali Limenes Islands and of course Black Sea ports like Novorossisk, Odessa, Kerch, Bourgas, and Constantza.”

He continues: “The fact is that we do serve ships coming from or going to Black Sea ports. Seventy per cent of potential buyers are in this trading zone. However, I still believe Turkey and the Black Sea grow together. We are happy with buyers checking bunkering opportunities in the Black Sea ports and Istanbul then bunkering in the area. If they are not happy with options in the Black Sea and Turkey, they consider alternatives in Mediterranean ports such as Pireaus or Malta. This is quite a satisfactory situation for both Turkish and other Black Sea suppliers and we have to act together to keep these vessels bunkering in our zone.”

“Of course ships bunkering in the Black Sea ports will not be taking bunkers in Turkey but we still have enough vessels to bunker. An improved facilities and bunkering options in the Black Sea region will of course effect Turkey negatively. However, 50,000 ships pass through the Turkish Straits every year. We will be always able to catch enough of them to keep Istanbul’s strong position in the area. Do not forget there are some 12,000 ships calling at the busy Izmıt Bay ports and a large number of vessels that never go to the Black Sea but stay in Turkey, the Aegean and the Mediterranean seas. That makes Istanbul an alternative and important bunker supply centre in the area.”

Other important factors in bunkering, Mr Muhtaroglu stresses, are quality and service. He claims: “Market players and buyers clearly confirm Turkey, specifically Istanbul, is much better on these issues compared to the Black Sea, and even most of the Mediterranean ports. We are a very fast, efficient and reliable bunker market. There are almost no quantity and quality claims, which is a most important issue for bunker buyers and shipowners active in the area.”

He says: “We and the Black Sea countries, especially Russia, have to look to the future together and we have to grow together. Russia is the most important country in the region and the relationship between Russia and Turkey is that we need them, and they need us.” He explains that Russia can supply Turkey with much of what it needs and Turkey is a very good market for Russia. Trade between the two countries has grown from US$450 million in 1992 to over US$25 billion now. Russia is now Turkey’s number 1 trading partner and Turkey is Russia’s number 5.

He concludes: “We have to accept that cooperation is the only way forward for both countries. As well as being the biggest oilproducing country in the area, Russia is also one of main suppliers of oil for the Turkish retail and bunker markets. That means we can easily grow together.”