African bunkering hubs gain as ships reroute around the Cape

SINGAPORE/CAPE TOWN (Reuters) – Ship-refuelling firms alongside Africa’s coast are seeing a surge in enterprise as extra vessels divert around the Cape of Good Hope, with warfare in the Middle East reshaping world delivery routes and boosting the continent’s function as a bunkering hub.

Carriers have been avoiding the Suez Canal and the Bab el-Mandeb Strait since late 2023, when Houthi assaults on Red Sea delivery started. U.S. and Israeli strikes on Iran and the closure of the Strait of Hormuz have strengthened the shift, prompting expectations that Africa’s bunkering sector will profit from extended instability.

Major container carriers together with Maersk, Hapag-Lloyd and CMA CGM mentioned this month they’re rerouting vessels around the Cape of Good Hope.

The detours lengthen voyage instances however permit vessels to refuel at rising African provide factors, accelerating funding by gas suppliers and buying and selling homes.

Existing bunker suppliers in Africa, such as Denmark’s Monjasa, have reported stronger demand in recent times, whereas new entrants together with Vitol, Bunker Partner, Peninsula, Flex Commodities and Global Fuel Supply have introduced enlargement plans.

“Volumes have been positively impacted by the Red Sea security situation causing more vessels to reroute south of Africa,” Monjasa spokesperson Thorstein Andreasen mentioned.

Monjasa, which has operated in West Africa for almost 20 years and in addition provides gas at Fujairah, reported additional will increase in bunkering exercise throughout the first week of the Iran warfare.

“No matter the outcome of the conflict, we expect overall volatility to remain high for a considerable period of time,” Andreasen mentioned.

NEW ROUTES BECOME ‘OPERATIONAL REALITY’

The scale of the shift is seen alongside the Cape route.

The Cape Chamber of Commerce and Industry mentioned diversions rose 112% as of early March, signalling what carriers now see as a long-lasting change in operations.

“After nearly two years of operating under these conditions, it is increasingly hard to describe our setup as a temporary measure. It has instead become an adaptation to a new operational reality,” mentioned Bhavan Vempati, head of Asia Market for Ocean at Maersk.

Maersk conducts routine bunkering at ports in West Africa and Tangiers, he mentioned.

The pattern has inspired new entrants. In November, Dubai-based Flex Commodities launched bodily bunkering at Namibia’s Walvis Bay and Luderitz.

“We are targeting the growing volume of traffic moving around the Cape and the offshore market around the region, offering an alternative to traditional bunkering stops in the region,” Flex’s managing accomplice Rakesh Sharma mentioned.

The firm is initially specializing in West Africa, the place provide stays under demand, notably offshore, he added.

Misa Energy, a bunker operator in Ghana, is scaling up volumes to satisfy rising demand in offshore bunkering zones, its operations supervisor Moses Komodatam instructed Reuters. He expects bunkering volumes in Ghana to triple in the subsequent decade.

Longer-term development prospects stretch past geopolitical disruption, with regional and intra-African commerce, port infrastructure funding and Africa’s positioning on world delivery routes supporting demand, mentioned Tahra Sergeant, Africa regional supervisor at the International Bunker Industry Association.

At a March convention final yr Mauritius Ports Authority mentioned total gross sales of bunker fuels had almost doubled at Port Louis to a file 929,043 metric tons in 2024 from 509,837 tons the earlier yr.

Regulatory points in South Africa, traditionally considered one of the continent’s largest bunkering hubs, noticed it lose enterprise to Port Louis and Walvis Bay as bunker volumes fell to some 80,000 tons a month in 2024 from roughly 130,000 tons a month in 2023, a PwC report mentioned earlier this month.

SECURITY AND SUPPLY RISKS WEIGH ON GROWTH

Industry sources cautioned that African bunkering faces obstacles starting from piracy and restricted infrastructure to uncertainty over provide as the shutdown of the Strait of Hormuz curtails Middle Eastern gas exports.

“Given the loss of crude supply and refinery run cuts, fuel oil supply is expected to tighten across all bunkering hubs,” mentioned Emril Jamil, a senior analyst at LSEG.

Infrastructure bottlenecks, such as congestion at the Port of Tema in Ghana, and the excessive value of merchandise because of tax regimes stay longer-term challenges, Misa Energy’s Komodatam mentioned.

Tax and licensing disputes additionally create uncertainty.

South Africa’s Algoa Bay, seen as a key refuelling level for worldwide delivery, has seen decreased bunkering capability since a tax crackdown in late 2023.