Singapore shipping fuel scandal sends traders scrambling

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#11
http://www.businesstimes.com.sg/governme...g-industry

OW Bunker case may reverberate through Singapore's bunkering industry
But MPA downplays fallout in Singapore, saying OW Bunker Far East accounted for under 3% of S'pore bunker supplied in 2013

By
Malminderjit Singhmsingh@sph.com.sg@MalminderjitBT
owbunkersighn1211.jpg The OW Bunker fraud case that hit Singapore's bunkering industry last week may not have caused major disruptions to fuel supply in ports here. PHOTO: AFP
12 Nov5:50 AM
Singapore

THE OW Bunker fraud case that hit Singapore's bunkering industry last week may not have caused major disruptions to fuel supply in ports here, but the financial fallout may yet unsettle the industry as companies start making their credit claims.

Already, at least two oil traders are said to be filing legal claims.

The Maritime and Port Authority of Singapore (MPA) said in a statement on Tuesday that there are more than 60 bunker suppliers in Singapore, and OW Bunker Far East (Singapore) accounted for under 3 per cent of the 42.6 million metric tonnes supplied in Singapore in 2013.

There would thus be "minimal disruption" to the supply of bunker or fuel for ships in the port of Singapore, it said, and added that it was working with the industry and trade bodies, specifically the Singapore Shipping Association (SSA) and the International Bunker Industry Association (IBIA), to contain the impact on bunkering operations in Singapore.

Denmark-based OW Bunker had last week applied for insolvency after reporting a US$125 million fraud in its Singapore-based subsidiary Dynamic Oil Trading (DOT) and a US$150 million risk-management loss. It confirmed that two senior employees in DOT were being investigated for the allegations.

News of OW's collapse had triggered early panic in the ship-fuel markets, sending prices up. In the Singapore port, the price of IFO380-grade fuel has risen 13.5 per cent to US$478.50 a metric tonne since OW's collapse last week, and buyers have scrambled for alternative sources.

One of the two oil traders planning legal action is Hin Leong Trading, Siingapore's largest independent oil trader, which on Tuesday was reported to have been preparing a lawsuit against OW Bunker Far East Singapore to claim S$1.67 million.

A source told The Business Times on Tuesday that Golden Island Diesel Oil Trading was also consulting its lawyer to file similar legal proceedings against OW in Singapore. The source could not confirm the claim amount, but said the company had gone to the SSA for help.

Bloomberg reported that two South Korean refiners, SK Innovation Co and GS Caltex Corp, had indicated that they had also been hit, but declined to say more.

There has been no formal confirmation yet on the number of companies affected or the extent of the claims that could emerge, although a report in trade publication Seatrade Global on Tuesday said that up to five Singapore bunker suppliers could have been hit, with up to a six-figure default payment for some of them; the publication said it believed that up to eight local and international ex-wharf fuel sellers and international oil majors could be affected.

Seatrade Global also said the Singapore bunker market has been hit by a credit squeeze following OW's collapse, as fuel suppliers and barge operators have turned cautious and asked for advance cash payments. Their situation is worsened by OW's reportedly owing 13 banks some US$750 million; since banks are secured creditors, the suppliers are the ones that have been left vulnerable.

An analyst who spoke to BT on condition of anonymity said this could have a cascading effect in the market, with more companies along the supply-chain falling. Companies seeking credit claims from OW may, for example, now tighten their credit terms with other bunker traders to protect their positions.

And as bunker suppliers face stricter credit terms from fuel suppliers, they may, in turn, cut their own credit terms to end operators to protect their own cash flow.

But several unknowns remain, said Yaw Yan Chong, the director for Asia at Thomson Reuters Oil Research and Forecast. Although the exposure from OW's fallout is on several levels - from the banks that lent it money to the fuel suppliers, barge operators and end-users - the extent of this impact can only be determined over time, he said.

A new potential player in the OW saga emerged on Tuesday, as one of Singapore's top 10 bunker suppliers by volume, Tankoil Marine Services, became implicated. Danish media reports quoted Arvid Andersen, the lawyer for DOT chief executive Lars Moller, as having said that the alleged fraud involved large amounts of credit given to Tankoil Marine through "credit sleeving" - the practice of granting unsecured credit in the industry; in this common practice, a third party helps a partner company fund a purchase for which it does not have the required financing or credit to do on its own.

Trade publication Shipping Watch said OW Bunker was known to engage in such financing on a large scale, with the alleged fraud arising from the DOT management having exceeded the internally-agreed limits for such credit terms. Mr Andersen had said that the incident was thus not so much a case of fraud as it was of a breach of internal guidelines.

Although OW had said it was reporting the two DOT employees under the Danish penal code, Danish police say they have yet to receive a report and are now planning to probe the company themselves; Bloomberg quoted a Danish police spokesman as saying that "possibly, there never will be any charges reported".

It was reported on Tuesday that another ship-fuel company, Vanguard Energy, had filed for bankruptcy in Singapore on Oct 29, merely a week before OW's case was reported.

*Strait Talk: OW collapse shocks industry; damage limitation top priority
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#12
Latest update on the bankruptcy...

Singapore barge involved in Hin Leong's claim against OW Bunker arrested

SINGAPORE — A shipping fuel delivery barge Laguna was arrested on Wednesday by a law firm acting for Singapore-based trader Hin Leong in a claim stemming from the bankruptcy of Denmark’s OW Bunker, according to court documents and a legal source.

A Singapore Supreme Court document showed that Laguna was arrested at 12.30 am Singapore time (1630 GMT) by Rajah & Tann Singapore LLP.

Rajah and Tann issued a writ of summons on Nov 8 on behalf of Hin Leong Trading against OW Bunker Far East (Singapore) for about US$1.3 million worth of bunker fuel delivered to the vessel Laguna at Universal Terminal on or about Nov 5, one of the documents showed. REUTERS
http://www.todayonline.com/singapore/sin...r-arrested
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#13
As AlphaQuant said, the "the fear of contagion" is happening...

Fuel oil liquidity hit by OW collapse as sellers withdraw credit

SINGAPORE — Fuel oil trading activity has slowed sharply in Singapore in the wake of the collapse of the world’s biggest supplier, with sellers withholding credit and demanding guarantees of payment from customers, traders said on today (Nov 13).

The bankruptcy of Denmark’s OW Bunker, filed last Friday, has not only sent buyers scrambling for new stocks, but also caused sellers to tighten their credit policies to the extent of offering no credit at all, an unprecedented move in a market that relies heavily on open credit.
...
http://www.todayonline.com/singapore/fue...raw-credit
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#14
Latest update. I reckon the impact should be minimum, and manageable...

Hong Kong bunker suppliers expect more demand as shipowners divert from Singapore

SINGAPORE — Hong Kong bunker suppliers are expecting up to 20 per cent more inquiries from shipowners who have had fuel contracts cancelled after the world’s largest supplier announced its bankruptcy last week, sources said on Friday.

Since the fall of OW Bunker, marine fuel prices in Singapore have climbed steadily and spiked to their highest in more than two years on Thursday, as tightening of credit led to a supply crunch amid prompt demand.

“My impression is enquiries have gone up 20 per cent, though it’s hard to put a figure to it. There were more prompt orders for delivery between five to ten days,” said a Hong Kong-based

marine fuel seller. “End-users are those that have had fuel fixed by OW.”

Hong Kong’s 380-cst marine fuel was at least US$10 a tonne cheaper than that in Singapore, on a delivered basis, on Thursday.

Delivered marine fuel oil in Singapore was priced at least US$8 a tonne above oil lifted from terminals, traders said, a trend rarely seen previous as wary sellers now factor in risks of default. REUTERS
http://www.todayonline.com/singapore/hon...-singapore
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#15
Nov. 19 (Bloomberg) -- U.S. units of OW Bunker A/S, the
Danish shipping-oil company that stunned investors by filing for
bankruptcy eight months after being valued at almost $1 billion
in an initial public offering
, sought court permission to sell
more than 150,000 barrels of oil.
The subsidiaries seek as much as $13.5 million by selling
more than 27,000 metric tons of various grades of oil at the
Royal Vopak NV terminal in Los Angeles, plus lesser amounts
stored in vessels offshore, the units said in a filing yesterday
in U.S. Bankruptcy Court in Bridgeport, Connecticut.
The U.S. businesses, opened in 2012 in Texas and
Connecticut as part of OW Bunker’s global expansion, filed
Chapter 11 petitions Nov. 13 after the parent company’s report
the previous week of a $125 million fraud by two senior
executives in Singapore and $150 million in losses from bad oil
trades. The company’s credit froze up afterward.
OW Bunker North America Inc. said in its filing that the
California oil must be sold quickly, at $350-to-$500 per metric
ton, to avoid fluctuating oil prices and required storage costs
of more than $300,000 a month.
The parent company, founded in 1980 and with operations in
29 countries, filed for bankruptcy and ceased operations Nov. 7
in Denmark, owing 15 banks about $750 million, according to
court papers. The U.S. subsidiaries have assets worth as much as
$50 million and debt of as much as $100 million, they said in
court filings.
The case is In re OW Bunker North America Inc., 14-51720,
U.S. Bankruptcy Court, District of Connecticut (Bridgeport).
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#16
Payment orders are also confused by the bankruptcy...

Precious Shipping asks court for fuel payment ruling after OW collapse

SINGAPORE, Nov 21 - Thai-listed shipowner Precious

Shipping has turned to the Singapore court for a

decision on which company it should pay for fuel it bought,

which is unclear after the bankruptcy of the world's largest

bunker supplier.

The collapse of OW Bunker, which had a market share of less

than 3 percent in Singapore, has disrupted not only supply

chains and credit lines but also payment orders, leaving buyers

unsure who should get payment for fuel that can go through many

hands.
...
http://www.todayonline.com/singapore/pre...w-collapse
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#17
The latest update on the scandal...

Fleet-owning unit of bankrupt OW Bunker taken over

COPENHAGEN (Nov 27): OW Tanker, a unit of bankrupt OW Bunker and owner of its marine fuel supply ships, has been taken over by a newly-created company, the fleet manager told Reuters on Wednesday.

OW Bunker, the largest ship fuel supplier in the world, collapsed earlier this month after it said it had lost almost US$300 million in hedging losses and unauthorised credit lines given in Singapore.

Henrik Pedersen said the takeover by Alba Tanker ApS, which has the trustees of the bankrupt company on its board, is part of the process of securing assets for the estate.

"We are not a very big part of the company," Pedersen said by telephone.

"We're the ship-owning part of OW Bunker and Trading. And that was our biggest client, of course, but we have always been run as a separate company."

OW Tanker owned 10 vessels and chartered 19, according to its website.

Pedersen said it employs around 115 people, mostly vessel crews, and is now looking for new clients.

PricewaterhouseCoopers (PwC) said it had agreed with ING Bank NV and OW Bunker's trustees to work together in recouping some US$750 million the company owes to a group of 13 banks, including ING.

The trustees from Danish law firms Gorrissen Federspiel and Plesner, who are on the board of Alba Tanker ApS, were not immediately available to say how the takeover of OW Tanker could relate to the debt owed to the banks.
http://www.theedgemarkets.com/sg/article...taken-over
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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