PETROJAM Limited, Jamaica’s State-owned oil refinery, announced plans Wednesday to re-enter the marine fuel market directly challenging private competitor West Indies Petroleum (WIP) amid a shifting energy landscape.

The refinery’s push to become a “global bunkering hub” comes just over a decade after Petrojam exited the marine bunkering business in favour of selling fuel to other suppliers who operate in that space, especially around the Kingston Harbour. Petrojam exited the marine bunkering business in 2013, and instead had been focusing on selling marine fuel from its road tanker wagons (RTWs) — the trucks which haul fuel across the island– to ports in Montego Bay, St Ann and Portland. It however said it is seeing opportunities to re-enter the market to sell marine fuel to vessels on the high seas in Jamaica’s Outer Port Limits (OPL), mainly ships traversing the Panama Canal corridor without scheduled stops, and has started conversations with cruise liners to take the fuel.

“We are navigating Jamaica towards becoming a leading regional and global bunkering hub, while fueling Caribbean tourism and commerce,” declared Petrojam General Manager Telroy Morgan. He added, “We have established a leading position in supplying high-grade marine fuel oil, backed by a trusted and reliable supply system that optimises overall efficiency for cruise and cargo vessels.”

Morgan was careful to point out that the market segment the refinery is going after was selected to avoid it being in direct competition with entities which currently buy marine fuel from Petrojam for supplying ships which come into the Kingston Harbour.

“They have their clientele. These clientele that are coming are new and need not start to interfere with their segment,” Morgan told the Jamaica Observer, noting that cruise liners are targeted because their demand for marine fuel is growing with more cruise liners traversing the region. Other commercial vessels are also targeted.

Morgan said it is also part of the company’s plan to diversify the source of its revenues.

“It is important for us, as a strategy, that at all points we can reach the market effectively. In other words, if our off-takers drop out for whatever reasons, we must have that lever to pull and have us directly to the customer. And that is what we are hedging against. We are starting here from a strategy standpoint.”

Petrojam estimates a regional demand of almost seven million barrels of Very Low Sulphur Fuel Oil (VLSFO) annually.

The foray by the State-owned refinery back into ship-to-ship bunkering comes on the back of the recent that it has signed a US$90 million agreement to supply up to 90,000 barrels monthly of VLSFO to Trinidad, bolstering its regional bunkering ambitions.

But getting back into the marine bunkering business sets it up for battling for a space with its main rival WIP.

WIP, which controls 750,000 barrels of storage capacity — Jamaica’s largest — recently entered a new partnership granting access to Sunoco LP’s 8.5 billion-gallon annual distribution network across 40 US states and the Caribbean. This positions WIP to be a big player in the market

Charles Chambers, chief executive officer, WIP, described the partnership as “a definitive game-changer” for Jamaica’s marine fuel sector. “This collaboration with Sunoco will dramatically enhance the WIP group of companies’ ability to serve vessels operating in Caribbean waters,” Chambers stated in a recent release.

Though WIP has signed that deal, Petrojam invites the entity to expand purchases from the refinery.

“It’s good for them to buy from us,” Morgan said.

Yet, the bunkering business is not the only area which Petrojam is looking to for growth. It is planning to invest about US$22.5 million over the next few months on its infrastructure, primarily to expand its presence in the regional asphalt market. It said it is currently optimising the storage infrastructure and will also build additional storage space as it readys for to boost exports.

“We expect by first quarter of next financial year to have that optimized operation up and running for us to supply the market,” he said.

“Now naturally, the new asphalt tank would not be ready by that time, but at least it will get us in an even more ready state later down in the year or the next year when that comes on stream.”

Morgan said the asphalt market provides the most growth potential for the company, and said that the aim is to at least double output volumes as requests for bitumen exports “coming through our ears”. Bitumen is a material derived from crude oil that serves as the primary binding medium in asphalt pavements.

“We are in fact exporting now to two companies in Trinidad who are selling into the Eastern Caribbean region through different road projects, etc. So we see that growing beyond what occurs currently, and the significant growth is in asphalt on a percentage basis, but on a volume basis, bunkering for us will be the biggest.”

Morgan also told BusinessWeek that it has its eyes on motor fuels market as well. WIP ahs been consolidating its foothold in that segment of the business, having captured 30 per cent of Jamaica’s motor fuel market since 2021, supplying chiefly, independent petrol stations.

“It’s a tight space, and we continue to compete vigorously. Where we see ourselves having an advantage is our supply reliability and our quality. As we move forward, in the next few months, we expect to be ISO17025 certified with our product quality regime,”

The designation will see fuel supplied by Petrojam getting a global quality assurance certification, something which the company counts as a big deal, especially in light of the “bad gas” saga of a few years ago. Petrojam’s fuel has always been adjudged to be of a high quality.

“All we’re doing is just to undergird what we have always done and stayed true to our quality,” Morgan said of the impending certification.”It’s making sure, from an international perspective, compliance, that we’re best in class in what we do.”

He pointed out that the market has seen heavier regulation for fuel quality since the bad gas which impacted hundreds of motorists.

Morgan said the company supplying reliable and quality products should foster its growth and fulfil its mandate to the country.

“We carry the strategic volumes for the country, and we have never run this country out of fuel. And we stand very proud around that. It comes at a risk, a big … financial risk. But it’s one that, in our mandate, we have done effectively for this country,” he said.