A fleet of small tankers is helping to meet surging energy demand in Myanmar, shipping gasoil and diesel from Singapore to Yangon in a highly profitable and steadily expanding service, Reuters reported.
About 20 small tankers with a combined capacity of about 220,000 deadweight tonnes, nearly all from Singapore, were operating on the route, the January 5 report said, citing shipping data from Thomson Reuters Eikon financial services software.
The number of tankers plying the route has doubled in the past year, an industry source said.
“Everyone is quite bullish about the Myanmar market,” Mr Lim Han, executive director and head of chartering at Singapore’s Hong Lam Marine, told Reuters. The firm, which started oil shipments to Myanmar from Singapore six months ago, is one of a handful of small, local shippers plying the route to Yangon, about 2,000 kilometres (1,260 miles) away.
Small tankers are used on the route because of constraints on capacity at Yangon’s port.
Growth in refined oil imports could exceed 8 percent this year, driven by Myanmar’s fast-growing economy as demand rises for power generation, construction and transportation, especially heavy-duty vehicles, the report said.
“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 earlier this month. The unit of rating agency Fitch Group said demand would be fuelled by the Myanmar Investment Law and economic growth.
Myanmar’s diesel demand rose to 110,000 barrels per day (bpd) from September to October 2016, from 80,000 to 90,000 bpd in the same period in 2015, Energy Aspects oil analyst Mr Nevyn Nah told Reuters.
Gasoil imports were expected to be between 37,250 bpd and 50,000 bpd in 2017, up from between 17,400 bpd and 19,900 bpd in previous years, said trading sources.
Shippers servicing the route enjoy healthy profits from arbitrage trades, Reuters said. It quoted traders as saying that state-owned Myanma Petroleum Products Enterprise has typically bought gasoil from buyers in Singapore, such as trading house Trafigura’s subsidiary Puma Energy, at a premium of more than $3 a barrel above Singapore prices.
Shippers said fuel shipments to Myanmar were sure to rise because Yangon’s port was being expanded to handle vessels of up to 50,000 DWT. The port currently handles ships between 5,000 DWT and 18,000 DWT, the report said.