Singapore's oil trading, bunkering sectors resilient despite Hin Leong crisis: statement
22nd April 2020 00:35 GMT

Singapore's oil trading, bunkering sectors and banking system remains resilient despite the challenges posed by a drop in global demand for energy as well as developments related to Hin Leong Trading, a joint statement by Enterprise Singapore, Monetary Authority of Singapore, and the Maritime and Port Authority of Singapore said late Tuesday.

Singapore’s oil trading sector is sufficiently diversified with more than 130 significant global, regional and local companies that trade energy products. The world's largest bunkering port is also an important regional storage, blending and distribution hub for refined oil products. The city-state recorded marine fuel sales of 47.46 million mt in 2019.

While Hin Leong is related to UT Singapore Services Private Ltd., which owns Universal Terminals by common shareholdings, Universal Terminals is operated independently of Hin Leong, the joint statement said.

Besides Universal Terminals, there are other independent oil terminal operators in Singapore including Vopak, Oiltanking and Tankstore, it said.

The Maritime and Port Authority of Singapore, or MPA, has also assessed that there will be no serious impact on Singapore’s bunkering industry, as per the statement.

There may be some short-term minor disruptions due to the lapse of contractual obligations by Ocean Bunkering Services and Hin Leong Marine International, it said.

However, the Singapore bunkering sector is well diversified with other licensed bunker suppliers, including Minerva Bunkering and TFG Marine which recently received their licenses, it said.

"ESG [Enterprise Singapore] and MPA will continue to work with stakeholders to ensure that Singapore’s supply chain for oil products and bunkering operations continue to function without disruption," it said.

Meanwhile, the Monetary Authority of Singapore, or MAS, is also in close contact with the banks on developments related to Hin Leong, it said.

"MAS agrees with the assessment by ESG and MPA and has reminded the banks not to de-risk indiscriminately from the bunkering and oil trading sectors," the statement said.

"Banks should, however, continue to apply judicious credit assessment on individual borrowers to manage their risks," it added.

Hin Leong’s managing director Lim Oon Kuin, or OK Lim, and his son and company director Lim Chee Meng said in two separate court filings for bankruptcy protection dated April 17 that the company suffered about $800 million in futures losses over the years that were not reflected in financial statements, S&P Global Platts reported recently.

Hin Leong also racked up another $1.136 billion of inventory losses in a span of under six months, according to the filings. Its inventory value fell 89% to $141 million as of April 9 from $1.277 billion as of October 31, 2019, and its inventory volume fell to 608,745 mt from 2.61 million mt over the same period, the filings showed.

Hin Leong Trading’s liabilities exceeded its assets by $3.336 billion as of April 9, with total liabilities of $4.050 billion and total assets of $714 million, the filings showed.

Surabhi Sahu,
22nd April 2020 00:35 GMT

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