The Middle East supplies over 60% of Asia’s imported crude oil, with trade flows moving from Saudi Arabia, Iraq, UAE and Kuwait into China, India, Japan and South Korea. The Malacca Strait's geographic position makes it a preferred site for ship-to-ship (STS) transfer operations, given its role as a conduit for goods traveling between the Middle East, Southeast Asia, and East Asia.

Singapore, located at the southern end of the strait, acts as a key bunkering and transshipment hub, reinforcing its strategic role in the energy supply chain. In the waters around Singapore, conditions are ideal for STS transfers. Transferring cargo in the Malacca Strait enables traders to save on port fees and reduce time delays, by removing the need for vessels to dock at ports. This strategic maritime hub has been prosperous for Singapore, placing it as a key player in the global maritime industry.

Many STS service providers operate in the Malacca Strait, as it is a growth market in the STS industry and there is high demand due to the volume of traffic in the region. STS operations in the Strait make up a significant share of the global market, with there estimated to be thousands of transfer operations taking place annually. Crude oil makes up the majority of the market, with large oil traders breaking bulk into smaller parcels for local delivery. Currently, a substantial portion of STS transfers take place for cargoes that are bound for Thailand, whose refinery capabilities are increasing.

LNG STS is a rapidly expanding segment due to the Asia-Pacific region’s energy transition and the adoption of cleaner fuels creating growing demand for LNG. For example, China and Japan aim to reduce dependence on coal which has created demand for LNG imported from Qatar and Oman via the Malacca Strait.

Singapore is also becoming a central hub for biofuel processing, trade, and bunkering, with more than sixty companies trading biofuels from Singapore. Meanwhile, demand for biofuels rises across the globe as the energy mix diversifies. India is emerging as a leading producer of biofuels, and exports into Southeast Asia would see opportunities for biofuel STS transfers in this region.

However, STS operations in the Malacca strait are not without challenges. The dependence of Asia-Pacific nations on Middle Eastern energy ties their economic stability to the uninterrupted flow of fuel cargos through this chokepoint. Because of this, disruptions caused by geopolitical conflicts, piracy, congestion, or environmental disasters would have a significant impact on energy supply and security.

JF Fendercare Middle East: ADIPEC