Singapore-based bunker fuel suppliers are turning to letters of credit (L/Cs) in the wake of the world's largest ship fuel supplier filing for bankruptcy.

Denmark's third-largest company, OW Bunker, has filed for bankruptcy after alleged fraud at its Singaporean unit, Dynamic Oil Trading.

Alternative suppliers

OW Bunker's financial problems emerged when it discovered suspected fraud by senior employees in its Singapore-based subsidiary.

Shipping lines are now trying to find alternative suppliers, but sellers are concerned about being paid and are turning to L/Cs to ensure payment.

"I heard most ex-wharf bunker fuel suppliers have either already pulled off their credit lines or are in the process of stopping it, and will now supply on a L/C basis only," a Singapore-based trader told the energy news provider Platts.

Fraud allegations

OW Bunker, which supplies 7 per cent of the world's bunker fuel used in shipping, reported two Singapore employees to Danish police amid claims of US$125 million in fraud.

Separately, the fuel supplier that was valued at almost US$1 billion in an initial share sale in March this year, has reported that it lost a further US$150 million through bad risk management.

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