Peninsula renews credit facility amid increasing financial scrutiny of bunker sector
15th June 2021 13:03 GMT

Marine fuel supplier Peninsula has renewed a $350 million European credit facility at a time when decarbonization costs and rising oil prices are raising questions for potential credit providers to the sector.

The $350 million syndicated facility includes an increase in the two-year committed tranche from $140 million to $210 million, Peninsula said in a statement June 15.

“During the COVID-19 pandemic there has been a tightening of credit conditions in the market, with several banks pulling out of facilities and reducing exposure to the energy sector,” Peninsula said.

There have been notable credit events in the bunker sector in the recent past, namely the collapses of Hin Leong and GP Global, but mostly market players have reported that a major credit crunch was kept at bay by falling oil prices in Q1 2020, with prices subsequently remaining below pre-pandemic levels.

Crude prices have now recovered to pre-pandemic levels. S&P Global Platts assessed front-month ICE Brent at $73.28/b at 1630 London time June 14, its highest since April 2019.

The credit environment could grow more challenging. The cost of shifting to greener fuels, uncertainty over the path to clean energy and greater scrutiny from banks for financing projects make for a challenging future credit environment, Svend Stenberg Molholt, Group Chief Operating Officer at bunker supplier Monjasa, told Platts in May.

"If you look into the future, where the mix of products is generally going to be of a higher value, then I'm sure there is going to be even more need for credit in the market," Stenberg Molholt said.

With companies needing to invest to meet key decarbonization goals, those that fail to keep pace may struggle to get the necessary financing, he added.

Peninsula’s renewal of the European credit facility follows its recent announcement of a strategic partnership with Enagas to build, own and operate a 12,500 cu m LNG bunker supply vessel in the Strait of Gibraltar.

So far the only alternative bunker fuel Peninsula has announced concrete investment plans for is LNG, although it said when it announced the Enagas partnership that this was the first step in its transition to a more sustainable future.

LNG presents the opportunity for shippers to cut CO2 but as a fossil fuel it may not be suitable to meet International Maritime Organization climate targets to reduce greenhouse gas emissions by 50% by 2050 compared to 2008 levels.

Bunkerworld ,
15th June 2021 13:03 GMT