Vitol turns Pakistan’s Gwadar into bunkering bet as Hormuz risk grows

By Staff Reporter

KARACHI: Vitol Group has started supplying marine fuel at Pakistan’s Gwadar Port, a wager that the deep-sea facility can carve out a share of the lucrative bunkering trade as shipping lines look for alternatives to Persian Gulf hubs rattled by the conflict between Israel and Iran.

Vitol Bunkers (S) Pte. Ltd., the Netherlands-based trading house’s marine fuels unit, began operations at Gwadar this week and expects to make 20 to 30 fuel deliveries to international shipping lines in its first 45 to 50 days, according to people familiar with the matter, who asked not to be identified discussing private commercial arrangements. The company supplied 2,500 tons of very low-sulphur fuel oil to a liquefied natural gas carrier on July 14 in its inaugural delivery, the people said.

The push into Gwadar comes as fresh US strikes on Iranian military targets and Tehran’s threats to choke off regional energy exports have made the Strait of Hormuz a riskier proposition for commercial shippers. Some shipowners and charterers have delayed voyages, rerouted vessels or sought bunkering options outside the Gulf entirely, upending a market long dominated by the UAE ports of Fujairah and Khor Fakkan.

“The customers, after all the Middle Eastern crisis and everything, they are looking for options,” one of the people said. “They are not getting credible options at the moment.”

Vitol is positioning Gwadar as a hedge against disruption at those established hubs rather than a wholesale replacement, the people said. “What we are trying to do is to basically present Gwadar as a credible option to the customers,” one said. “If there is an attack in Fujairah, then the customer needs bunkers.”

Ammar Hussaini, Vitol’s global strategic business manager, said in a statement posted on the company’s website that Gwadar has “benefited from significant investment” and that Vitol looks “forward to building our offering in this location and serving customers across the region.” Hussaini didn’t respond to a request for comment made through the company.

Vitol has already secured forward commitments from clients for future Gwadar deliveries, the people said, and expects vessel traffic at the port to climb over the coming months. The trader holds multibillion-dollar annual supply contracts with shipping companies including Mediterranean Shipping Co., QatarEnergy LNG and CMA CGM.

The company is running two bunker barges at the port with combined capacity to supply as much as 50,000 tons of fuel a month, sourcing feedstock from Pakistani refineries, the people said. Until permanent storage tanks are built at Gwadar, Vitol will load fuel in Karachi and ferry it to the port for delivery, they said.

Muhammad A. Rajpar, chairman of the Pakistan Ship’s Agents Association, called the launch a “groundbreaking achievement” for the country’s maritime sector. “This crisis around the Strait of Hormuz has delivered an opportunity,” he said.

Rajpar said Gwadar would compete for bunkering business against Singapore, Fujairah, Colombo, and the Indian ports of Deendayal and Mundra. “Our main competitor will be Fujairah,” he said, adding that Gwadar’s geography and lower port charges should make it the cheaper option for shipping lines. He said building out storage infrastructure at the port remains a prerequisite for Gwadar to compete on equal footing with rivals.

Dostain Jamaldini, a former chairman of the Gwadar Port Authority, said the port’s position near the mouth of the Strait of Hormuz gives it a structural edge over Pakistan’s other ports, Port Qasim and Karachi Port. “Gwadar Port would be highly convenient for vessels, as they can take on bunker fuel without entering the Strait of Hormuz while en route to the Pacific Ocean or China,” he said.

Jamaldini added that Gwadar’s proximity to the strait, compared with Port Qasim and Karachi, also benefits vessels sailing from the Red Sea toward the Indian Ocean — and raised the prospect of Pakistan expanding the business in partnership with Iran. “Since we have a sister-port agreement with Chabahar in Iran, we can also integrate this bunkering business with the Iranian port and can jointly make a lot of earnings,” he said.