Myanmar's breakneck growth bring surge in fuel oil shipping from Singapore

Myanmar's breakneck growth bring surge in fuel oil shipping from Singapore

Myanmar's oil imports are surging to fuel a fast-growing economy and rebuild
rotting infrastructure, creating a small but profitable route for ships
making a beeline for the emerging southeast Asian nation from the regional
hub of Singapore.

Servicing growth that could top 8 percent this year is a clutch of small
tankers ferrying gasoil and diesel from Singapore 2,000 kilometers (1,260
miles) north to Myanmar. The country's sole port, at Yangon, can only handle
small vessels.

Shipping data in Thomson Reuters Eikon shows that around 20 small tankers
with a combined capacity of around 220,000 deadweight tonnes (DWT) are
currently shipping refined products into Myanmar, virtually all from
Singapore. That's about twice as many vessels as were on that route around a
year ago, according to one shipper.

"Everyone is quite bullish about the Myanmar market," said Lim Han,
executive director and head of chartering at Singapore's Hong Lam Marine.
The firm, which started oil shipments to Myanmar from Singapore six months
ago, is one of a handful of small, local shippers now plying the route.

After almost 50 years of economic struggle under military dictatorship,
Myanmar is opening up to investors as it tries to reconstruct roads,
factories and airports, as well as supply an electricity grid stretched to
breaking point.

Rising use of refined oil products like gasoil or diesel is a leading
indicator for economic growth in places like Myanmar. The fuels are mostly
used in power generation, construction, and transportation, especially in
heavy duty vehicles.

"We forecast refined fuels consumption in Myanmar to increase at an average
annual rate of 6 percent over the next 10 years," BMI Research said this
week. The unit of rating agency Fitch Group said demand would be fueled by
new laws supporting foreign investment, as well as strong economic growth.

THE SINGAPORE ROUTE

Myanmar's diesel demand rose to 110,000 barrels per day (bpd) over September
to October 2016, from 80,000 to 90,000 bpd over the same period in 2015,
according to Energy Aspects oil analyst Nevyn Nah.

Its gasoil imports are expected to hit 37,250 to 50,000 bpd in 2017, up from
just around 17,400 to 19,900 bpd in previous years, according to involved
trading sources.

Although the amount of fuel being shipped into Myanmar is small by
international oil trading standards, with global crude oil demand
approaching 100 million bpd, the shippers servicing the route enjoy healthy
profits from arbitrage trades.

Shippers say fuel shipments to Myanmar will rise further. Yangon's port is
being expanded to handle ships up to a size of 50,000 DWT, compared with the
current fleet of ships sized at 5,000-18,000 DWT. That would put the port of
Yangon ahead of ports such as Bangkok and Jakarta's Tanjong Priok and on a
par with Ho Chi Minh City in terms of ability to handle vessels.

Singapore, as Asia's oil trading hub, will benefit further from this rising
demand as it takes in surplus fuels from other regional markets and offers
it to buyers in need of supplies - like Myanmar.

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Link to Original Article:
http://www.reuters.com/article/us-myanmar-singapore-gasoil-idUSKBN14P0U4

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com