GAC Bunker Fuels
Fuelling the future
Meeting the bunker challenge in a high-stakes business
The stakes are high in the oil & gas sector. Millions of dollars have been invested and the potential risk to manpower and infrastructure is very real. It is imperative that the highest standards are maintained, both for operations and supporting services such as bunker fuel delivery.
Unlike the shipping sector, where the bill for bunker fuels can represent up to 90 per cent of operating costs, their supply is often treated as an afterthought in the oil & gas sector. Because of the high earnings and hire rates for rigs, the focus is usually on reducing time in port to optimise savings on dollar per day rates. It’s a complex market, as every oil & gas customer has a different procurement strategy and a different level of sophistication when it comes to bunker purchasing.
GAC Bunker Fuels has been trading marine fuels to oil & gas sector customers for the past five years. In that time, it has encountered many different procurement methods, including the following:
Reverse auctions: Largely unloved by bunker trading and supply companies, reverse auctions are becoming more common. Eight or nine suppliers participate in time-barred bidding, sometimes at a port with just one supplier. All must bid, or they will be removed from the panel for the next auction. The Key Performance Indicator (KPI) for the buyer is the cost saving from first bid to last. Whilst this can make the purchaser look great in his manager’s eyes, without using a price benchmark in the specific port on the given day, he or she may end up overpaying by five to ten dollars per ton against the market rate rather than making a saving.
Panel of brokers & traders: Some consider using a panel of three the most equitable purchasing method, but traders and brokers beg to differ as it spoils the market. Bunkers need to be sold at a fair price – not just for the customer, but also for suppliers. Oil & gas pay for a cash-flow solution as well as the fuel. That isn’t always reflected in the price when using a panel.
One price, lowest wins: This is a relative newcomer to the bunker trading scene, and one that works against traditional methods. Bunker traders work well with feedback and ‘firm counters’, the ability to work with purchasing managers to cover the market and reach a fair price for all. Oil & gas companies, however, ask for one price from every trader and take the lowest price. No negotiation. By using this method, they send a message that they just want to fix the fuel and move on. It’s hard to imagine a ship owner/charterer being willing to take the first price and fix, as there are cost savings to be had by negotiating.
Using one company to cover the market: The best way to save money on fuel procurement is to have one company cover the market, using a price benchmarking tool such as Platts, Bunker World or Argus to monitor the price in port on the day of the fixture. On the whole, this is the preferred method of the shipping industry, and many believe oil & gas companies will follow suit soon.
This assortment of procurement methods presents bunker companies like GAC Bunker Fuels with a unique challenge in terms of maintaining operational excellence. When a procurement manager requires a specific product, at a specific port, and at a specific time, there is no room for poor service.
GAC Bunker Fuels meets that challenge by working with the GAC Group’s global ship agency and logistics network to deliver smooth service for every aspect of an oil & gas company’s port call and streamline administration by providing a single invoice for all services.
To enhance its operational excellence, GAC Bunker Fuels was awarded ISO 9001 certification for bunker trading and brokerage in 2012, underlining its commitment to quality and customer satisfaction.
Around the world, around the clock, GAC Bunker Fuels staff in Singapore, India, Egypt, Dubai, Scotland, Cyprus, the USA and Brazil work with the GAC network to meet the demanding requirements of the oil & gas sector – today and tomorrow.
GAC Bunker Fuels
Services: Trading, Brokerage, Customised service packages, Port information and support