Monday, June 27, 2016

Brexit Makes Waves Along the Straits of Gibraltar

 Strait of Gibraltar map

A U.K. vote to leave the European Union this week could intensify price competition over bunker fuels in the Mediterranean, as two key ports in the region vie for dominance.

A vote for the U.K. to leave the EU would mean Gibraltar, its port and physical border, would also exit. For ship owners operating in the Mediterranean, a U.K.-Gibraltar "Brexit" would increase the number of administrative steps they would face, should their vessels wish to stop at other European ports after anchoring at Gibraltar, industry sources said. This could favor bunkering at Algeciras, a source at Spain's governmental port authority told OPIS.

"It could boost [price] competition between Gibraltar and Spain over bunker fuels," one London-based shipbroker told OPIS.

Gibraltar, whose bunker operators include Cepsa, Vemaoil and Aegean Bunkering, could move to lower prices in order to continue to attract tankers into its port. Bunker fuels administered at the port currently enjoy a tax-free status within the EU.

The port of Algeciras, already something of a hub with respect to the storage and transit of oil products and bunkering, is poised to seize new customs should shipowners opt to avoid the port of Gibraltar. Last year, Algeciras administered some 3.2 million tons of bunker fuels. Some 8,600 vessels have stopped at the port to refuel so far this year.

"It's a hot question these days," Agustin Silva, managing director of the Vopak Algeciras storage terminal, which specializes in bunker fuels, told OPIS in an email last week. "At Vopak Algeciras we don't see as a threat the Brexit. Today, Algeciras and Gibraltar compete with already different customs and excise regimes.

Gibraltar today is not part of the Common Customs Territory ... as Vopak we have the maximum respect for the political decisions of the countries we operate in."

"If prices at Gibraltar do go up, people will switch to somewhere else [for bunkering]," the shipbroker said. "There are plenty of options. But Gibraltar is such a brilliant place for vessels to stop. Strategically, it's convenient and incredibly safe, I don't think that for a couple of hours in extra paperwork ship owners will stop using it," he added.

The impact of the Brexit on the bunkering activities of Algeciras and Gibraltar "remains to be seen," a spokeswoman for the Algeciras port authority told OPIS.

The Gibraltar port authority did not respond to requests to comment by presstime. 

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