Brightoil provides update on business operations and independent review

Business update covers e-commerce, sulphur cap, bunker buying and Zhoushan project.

Image credit: Pixabay CC0

Updated on 01 Aug 2018 13:14 GMT

Bunker seller Brightoil Petroleum on Wednesday provided an update on both its business activities and the ongoing review of its transactions.

E-commerce progress and 2020 fuel talks

Discussing the firm's International Trading and Bunkering (ITB) unit, which covers both sales of petroleum products from international trading and revenue from marine bunkering, Brightoil explained that it was in the process of merging its traditional business with its e-commerce platform in order to achieve "intelligent, transparent and light-asset operations".

Two e-commerce versions of its e-commerce platform are expected to be launched in the financial year of 2019, Brightoil said.

On the issue of the upcoming implementation of the global 0.5 percent cap on fuel sulphur content, Brightoil said it was in talks with international oil majors, Chinese national oil companies and regional refineries to find solutions and prepare for the new low-sulphur era.

Marine transportation businesses buys low in early 2018

Referring to its marine transportation businesses, Brightoil observed that, during a period of rising fuel prices, it had managed to secure its vessel fuel costs at $300 per metric tonne in January and February 2018, whilst between April and June, bunker costs had increased to $415 per tonne.

Zhoushan project delays

Strategically located at the centre of the Yangtze River Delta region, which includes key locations such as Shanghai, Hangzhou, Ningbo and Zhoushan, Brightoil's Waidiao Island (Zhoushan) facility has a total capacity of 3.16 million cubic metres (cbm) for the storage of petroleum products, with the first phase offering 1.94m cbm of storage and the second phase an additional 1.22m cbm.

The terminal facilities will be equipped with 13 berths to accommodate vessels from 3,000 to 300,000 deadweight tonnes (dwt).

Brightoil noted on Wednesday that both the terminal and storage phase 1 facilities are expected to be completed and become operational by end-2018 or early 2019, while phase 2 of the storage project is slated for completion by mid-to-end 2019.

Initially, phase 1 was due to be completed in the second half of 2017 and become operational by the end of 2017, whilst phase 2 was scheduled to be completed in 2018.

Brightoil explained that "the construction project encountered delays from its initial schedule due to innate unpredictable factors, including that the construction is on outlying islands, and that the topography and geological factors are relatively complex".

"The various departments of the company have expedited the construction work; it is expected the project will be completed and commence operation as soon as practicable," Brightoil added.

Earlier this week, Brightoil confirmed that it is in preliminary negotiations with potential investors for the sale of its Zhoushan oil storage and terminal facilities as well as 15 shipping vessels (comprising VLCCs, Aframaxes and bunker tankers).

Awaiting results of independent investigation

In a previous statement in May, Brightoil had explained that, in relation to work being carried out by an independent adviser to review previous transactions made by the company, its Audit Committee - which comprises independent non-executive board directors Lau Hon Chuen and Chang Hsin Kang as members, and Kwong Chan Lam as chairman - was "further negotiating" with the independent adviser with respect to the further steps that had been recommended for the review.

And on Wednesday, the marine fuel seller explained that its auditor is now awaiting the results of the independent investigation in order to be able to resume audit work.

Brightoil's so-called 'resumption plan' is for the Audit Committee to first complete the review, then for the audit to be completed, and the 2017 annual results and 2018 interim results to be published.

The company said today that it was not in a position to provide a timeline because "there is not enough information for the company to set down a time schedule for the completion of relevant audit".

As previously reported, trading in shares of Hong Kong-listed Brightoil was halted on October 3, with the company requesting a suspension until the publication of its annual financial results. The firm's interim results for the six months ended December 31 are also yet to be released.