World Bunkering > News > Spring 2010 > Opportunities for change

Olga Bogacheva

There are no official statistics on bunkering fuel sales in the Russian Far East. This is the single market where rouble sales occupy a significant share, about 200,000 tonnes annually.

The Far East bunkering market may be divided into five major regions: Primorje, Habarovsky Kray, Sakhalin, Kamchatka, and the high seas where fishing vessels take bunkers. Primorje According to various sources there are some 30-40 bunkering companies operating in the six ports in the Primorje region. These are Vladivostok, Nahodka, Vostochny, Slavyanka, Posjet, and Zarubino.

• Vladivostok

Following the introduction of restrictive custom tariffs for used cars and a Federal Customs order on declaration of scrap metal in Petropavlovsk-Kamchatsky port (Vladivostok used to tranship about half of all scrap metal exported from the region) the port lost 50% of its transhipment revenues. Though bunkering occupied only about 10% of the total Primorje market, this still represents a significant loss due to the reduction in the total amount of port calls. Small bunkering companies that provided the major share of bunkering services to the vessels carrying used cars are seriously suffering from reduced demand.

In January 2009, a Federal Customs order that fish products from international waters must go through Russian ports for declaration procedure came into force. This has caused a certain increase in port calls in Vladivostok, meaning that fishery demand for bunkering fuel has also increased (previously, fishing vessels often headed to Asian ports). But the financial position of many fishing companies remains unstable. Only two to three large fishing holdings (NBAMP, Rybkolhoz Ogni Vostoka, and Preobrazhenskaya Base of Trawler Fleet) can still be relied on to make timely payments. Despite this, fishing companies cover up to 30% of light fuel demand.

The container terminal at Vladivostok Marine Trading Port (VMTP) has put new facilities in operation despite the crisis. Many container carriers prefer to order bunker fuel in Russia. The average purchase is 50 tonnes of light fuel and 300 tonnes of heavy fuel per ship monthly, which totals up to 5,000 tonnes per month. Far East Shipping Company (FESCO), the largest Russian bunker customer in the Far East, operates steadily ordering 3,000-5,000 tonnes of fuel every 10 days.

The following petroleum storage bases and oil terminals offer bunkering services at Vladivostok port: Oil-loading terminal of Vladivostok Marine Trading Port. The terminal has an annual capacity of 0.5 million tonnes of oil products. The complex consists of 150 metre berth and beach fuel tanks, capacity 22,000 tonnes. The berth depth allows provision of services to tankers with dead weight tonnage up to 10,000 tonnes and keel depth 8.5 m. The terminal provides bunkering services and oil products conditioning for domestic market and for export purposes.

Transhipment complex for light and heavy oil products owned by Alians-Primorsknefteproduct Vladivostok branch. Coastal petroleum storage base offers supplies to local gas stations, marine transhipment and light and heavy bunkering services. The total capacity of the storage tanks is 160,000 cu m. Three oil-loading piers can handle up to 20,000 tonne stems to tankers of up to 10 metres draft. Annual transhipment output exceeds 1.5 million tonnes of oil products. There are also two other shore storage bases owned by Niko-Oil and Vladivostok Fishing Port.

• Nakhodka

Major cargoes at Nakhodka are timber, exported oil products, sea products and containers. The trading port managed by Evraz Group operates at 30% of its capacity. Container throughput is developing rapidly; a new liner service came into operation in June, and two other liner services are imminent. Nakhodka has the largest oil terminal at the Far East, owned by Rosneft-Nahodka-Nefteproduct. The total storage capacity is 400,000 tonnes. There are berths with depth up to 11.5 m for tankers with deadweight up to 50-100,000 tonnes. Monthly bunker sales are 50 ,000-80,000 tonnes. Bunkering is offered in the package with the main cargo handling services, Rosneftbunker being the single supplier.

The Transbunker oil terminal was built in 2004. It consists of storage tanks owned (18,000 cu m) and leased (5,000 cu m) by the company; 14 heated tanks supplied by rail; a berth for tankers and bunkering vessels, deadweight up to 10,000 tonnes; pump station, capacity 400 cu m/hour; an automatic blending plant, capacity 400 cu m/hour. The facility is completely autonomous and equipped with modern discharge, filling and blending machines. The estimated annual terminal capacity is 500,000 tonnes of bunkering fuel. There are also two other beach storage bases owned by trading and fishing ports.

Rosneft’s development program envisages construction of a new refinery near the end point of the Eastern Siberia–Pacific Ocean pipeline and an expansion of oil products storage capacity.

• Vostochny

Coal and container terminals are still the key infrastructure in Vostochny. New container handling lines are being put in operation, and turnover is growing. The coal terminal regularly increases its production programme. The average deadweight of vessels under service is 60,000-150,000 tonnes. Monthly bunker consumption is 30,000-50,000 tonnes.

Three coastal fuel storage facilities are in operation, located at the Vostochny oil terminal, the coal terminal and the container terminal. There are several major players on the Primorje market. Pavino delivers oil products produced by Gazpromneft Marine Bunker and several Siberian mini-refineries. Pavino owns three vessels and operates from all terminals in Primorje. The majority of clients are Japanese, Korean and Chinese shipping companies.

• Nahodkaportbunker

Offers oil products produced by Rosneftbunker. It also operates directly with shipowners under agent agreement. The company owns five vessels and operates from Rosneft-Nahodkanefteproduct terminal. The majority of clients are Singapore, Korean and Chinese brokers and shipping companies from Nahodka and Vladivostok ports.

Daxin Petroleum Pte , which purchased the Fortuna-1 tanker last summer, uses leased terminals. Clients are Japanese, Korean, Chinese shipping companies, Singapore, Korean, and Chinese brokers. Transoilbunker Holding (OilTransbunker, Mortransbunker, Ufa Oil Group plus 5-6 other legal entities) owns five vessels and has contracted all Primorje terminals for transhipment. Clients include FESCO, shipping companies from Primorje, and fishing companies from Sakhalin and Kamchatka.

Nayada owns two vessels and has concluded storage contracts with all Primorje terminals. The majority of its clients are Singapore, Korean, Chinese brokers and shipping companies from Nahodka and Vladivostok ports.

Marinebusiness DV recently concluded direct contracts for the purchase of oil products with Gazpromneft Marine Bunker, Alians- Bunker and Rosneftbunker. The company owns two vessels and has signed long-term transhipment contracts with all Primorje terminals. The majority of clients are Singapore, Korean, and Chinese brokers and shipping companies from Nahodka and Vladivostok ports.

Tranzit DV Trading House signed contracts with Gazpromneft Marine Bunker and Alians-Bunker. The company owns one port bunkering vessel and five tankers (not used for bunkering services) and a beach petroleum storage base in Slavjanka port (Vostokbunker). The total sales of bunkering fuel in Primorje ports for hard currency reached 85,000 tonnes in September 2009.

Habarovsky Kray

Major ports in the region are Vanino, Sovetskaya Gavan, and Muchke. Stevedoring companies Vaninsky Marine Trading Port and Transbunker handled about 10 million tonnes of goods in Vanino port in 2008. Timber accounted for about 20% of turnover (previously 30-40%). The major share in freight turnover is occupied by oil products (Transbunker) reaching 3.5 million tonnes. Imported aluminium makes up slightly above one million tonnes, and alumina – the same quantity. Major bunker customers are foreign vessels calling the port and vessels owned by Sakhalin shipping company operating on the Vanino–Holmsk route.

Bunkering companies are Transbunker, Marinebusiness, GavanBunker. Transbunker has approximately 70% of the market, Marinebusiness has 20%, and GavanBunker 10%. Usually fuel prices in this region are higher than in Primorje. This is caused by the small number of sellers and clear segmentation of customers. Each seller provides service within its sector, conflicts of interests are rare, and thus, price wars are excluded. The foreign vessels calling at Muchke port are an exception. This market sector emerged recently and each seller strives to occupy this niche.

Sakhalin

Holmsk and Korsakov ports
The majority of fuel oil consumers are housing and public utility services, fishing companies and Sakhalin1-2-3 projects.

Kamchatka

Petrovsky and Kamchatsky ports
Two of Russia’s vertically integrated oil companies, Rosneft and Gazpromneft, entered the Far East bunkering market at the end of 2007. Alexey Okhotnikov, bunker sales manager of Marinebusiness Ltd, commented on this progress: “Serious changes occurred on the market. Firstly, the availability of resources is different. Previously, bunkering companies purchased oil products ex-works through bids. Now you can buy fuel from VIOC directly from beach storage facilities. Thus, turnover has increased and business is simplified.

“Currency bunkering”, ie fuel selling and purchase for hard currency, also changed. Those rare companies dealing with VIOC in hard currency no longer have problems with VAT reimbursement because suppliers are responsible for it now. However, it is practically impossible for small companies to conclude direct contracts with Rosneft or Gazpromneft Marine Bunker. Only direct contracts with Alians are available for them. VAT reimbursement has became more complicated in the area recently because less taxes are collected in Russia.

Profitability has dropped during the last two years, and the market has become more competitive. End customers wishing to cut expenses have introduced bidding for the purchase of oil products. Large foreign brokers have concluded direct contracts with VIOCs and don’t need local services any more.

Before 2009 “currency bunkering fuel” was supplied under terms which stipulated 30 days credit. At present, respite for payment is feasible only for large bunkering companies and only for well-known clients. Generally sales with 14 days credit are considered reasonable now. Companies operating vessels on regular services prefer inexpensive fuel with a short payment delay. Others, especially the trawler fleet, have no other choice than to agree to higher prices if 30-45 days credit is critical for them. Probably the real cause is the crisis, shortage of working capital and cheap credits.

Availability of resources is also reduced. Before VIOCs appeared in the market independent bunkering companies could buy oil products from almost any refinery. Now only Alians is ready to supply small companies. Selling procedures at Rosneft and Gazprom are very complicated and bureaucratized. Thus, demand for production of independent Siberian refineries offering fuel at almost 300 rub/t discount against VIOC’s prices significantly grew. Alexey Okhotnikov claimed that these manufacturers cover the local demand for lowsulphur fuel oil. Consumption of this fuel is not high in the Far East. Japanese companies buy about 2,000-3,000 tonnes monthly.