Malta’s strategically advantageous position in the central Mediterranean means that, for millennia, it has been a commercial trading hub in this highly important and busy area. Its key location to the south of Sicily, between Europe and North Africa, makes it close to all major ports in the Mediterranean.
Maritime trading activity in the area goes back thousands of years. Malta has been at the heart of it from the outset, occupied by the Phoenicians, Greeks, Romans, Arabs and, more recently, France and Britain who closed their last military base here in 1979. All these occupations left their mark on the Maltese, in the form of language, culture, customs, cuisine and more.
Malta’s attractiveness as a base for trade and conquest meant that it frequently came under attack during its turbulent history, and the Knights of Malta famously repelled a ferocious attack by the Ottoman Turks in 1565, who wanted to use the island’s strategic advantage to further their ambitions for the area.
More recently, Malta came under sustained attack by Axis forces during World War II, with more than 3,000 air raids and many thousands of tons of bombs dropped on this tiny little island between 1940 and 1942. Even then, it was shipping that came to the island’s rescue in the form of the legendary Santa Maria Convoy which, bruised and sinking, brought in vital supplies which brought the island back from the brink of possible capitulation. So dire were the people’s circumstances, and so hard did they fight, that King George VI made the unprecedented decision of awarding the George Cross to the entire island.
While World War II saw the beginning of Malta’s involvement in the movement and storage of fuel, mainly for military vehicles, planes and ships, oil-related commercial activities such as bunkering are relatively recent in Malta (1960s) when compared to a lot of the competition.
Bunkering is the supply of fuel for shipping, including organisation, management and distribution of fuel among available bunker storage facilities. It is a growing industry which uses both onshore transhipment and offshore transhipment hubs. The onshore oil transhipment hubs include the Oiltanking, MOBC, Enemed Terminals, while the offshore transhipment hub and services include both ship-to-ship operations and distribution and supply of bunkers. From the Maltese perspective, both are vital for the importation of fuels as they are for global oil trade, supplying some of the world’s largest economies with oil products ranging from fuel oil, gasoil, gasoline, aviation fuel, biodiesel, liquefied petroleum gas and ultra-low-sulphur diesel.
In Malta, the three main onshore oil transhipment hubs are Oiltanking Terminal Malta, Enemed Terminals comprising Ħas-Saptan and Ras Ħanżir, and Mediterranean Offshore Bunkering Company (MOBC). All three of these facilities play an important role in Malta’s booming local physical bunkering operations and international trade.
Oiltanking Terminal is the largest oil terminal in Malta, servicing major oil traders by storing and blending products for international clients and has a capacity of 568,300CBM.
Enemed Company Ltd, which runs the Enemed terminals, is one hundred per cent owned and run by the government of Malta. It operates on a completely commercial basis and does not receive any government subsidies or subventions. Enemed is responsible for the importation, distribution and wholesale of petroleum products for the local market (including the aviation sector) and also offers its oil storage facilities to third parties.
All three terminals service worldwide traders by storing and blending their oil products in Malta, which are eventually destined for onward distribution to France, Italy, Spain, Cyprus, Egypt, Lebanon, the US, Singapore, Malaysia and Japan to name but a few. These state-of-the-art oil terminals with their experienced workforces have helped make Malta one of the leading providers of onshore transhipment hubs.
Maritime industry kept away from partisan politics
It may surprise some to learn that Malta, despite its small size, is considered one of the largest bunker ports in the Mediterranean, its strategic position playing no small part in this. The bunker products are mainly LSFO (low-sulphur fuel oil) or DMA (also known as marine gas oil or MGO) which is stored and sold on to local bunker barges from one of the oil storage facilities. The product is then sold on to shipowners whose vessels are either within port limits or in Maltese territorial waters, in any given designed anchoring bunkering position as may be authorised by Transport Malta (see map). These world-class physical suppliers, along with regulated bunker licence holders (licences issued by the Maltese authorities), have recorded increasing bunker deliveries year in year out.
These bunkering activities have helped Malta maintain its position as one of the leading bunker ports in the Mediterranean, despite fierce competition from Gibraltar, Algeciras in Spain, Ceuta (a Spanish autonomous city in North Africa), Piraeus in Greece and Cyprus. The total amount of bunkers in the two-and-a-half years from 2018 amount to 6.5 million tonnes and all this oil is imported into the three onshore facilities in Malta.
Due to environmental concerns, the bunker market is continuously striving towards providing cleaner fuels and the recent change from HSFO (high- sulphur fuel oil) to LSFO (low-sulphur fuel oil) was a milestone for the industry. The bunker market is under constant pressure from shipowners, port authorities, environmental NGOs and others to provide cleaner fuels.
The LNG storage tanker Armada Mediterranean berthed in Malta in October 2016, representing further efforts to provide cleaner fuels by the island’s bunkering industry, and will open up the possibility for LNG bunkering in Malta in the future.
The cruise liner industry will be one of the first to make the change to LNG fuel, and large cruise operators have already been making enquiries about LNG bunkering. Malta already has the advantage of being a home port for most of the major cruise lines, meaning that there are both environmental as well as commercial advantages to change to cleaner fuels.
Once again, Malta’s strategic location in the central Mediterranean have proved to be a huge advantage with offshore transhipment hub and services, including some of the largest transhipments via ship-to-ship operations at Hurd’s Bank.
Hurd’s Bank is a safe anchorage for ships and is located around 13 nautical miles east of Malta. Virtually any type of vessel can anchor there and await orders from their owners for the next voyage; arrange crew relief; top up supplies such as food, water and medicines; carry out minor repairs and all related ship husbandry tasks. These tasks are all handled through service providers based in Malta. Competing anchorages in the Mediterranean include Augusta in Sicily, Cyprus and Gibraltar.
The major part of Hurd’s Bank lies in international waters, catering for a variety of international oil companies to anchor floating storage units in order to distribute fuel all around the world. Major oil companies appoint service providers such as shipping agencies; ship-to-ship providers and specialised inspection companies; service providers, offering the testing of cargo after it is transshipped; and logistics providers for items such as fenders, cargo hoses and ancillary equipment.
The service providers appointed go through a rigorous vetting procedure every three to six months from the major oil companies in order to make sure that all their equipment and procedures are up to or above standard and are in line with ISO, SIGTTO & OCMIF guidelines. The break bulk cargo (break bulk cargo or general cargo are goods that must be loaded individually, and not in containers or in bulk as with oil or grain) carried out at Hurd’s Bank help supply the local and international markets with fuel products such as ULSD, aviation fuel and HVO.
Being a major oil transhipment hub, it has contributed greatly to the Maltese economy, and the chain to service and supply of this part of the shipping industry is far-reaching. The industry is rich in skilled personnel and any service providers need to be approved by companies contracting them, thereby ensuring the best quality product possible. The numerous services supporting the shipping industry include transport, accommodation, catering, specialised ship suppliers, repairs and agents, legal and financial services, terminal operators, surveyors and divers. Ships performing cargo operations, services and bunkering in Malta pay port fees and bunker tax, contributing directly to the economy. In Malta, shipping employs around 12,000 people directly related to the industry and makes up 13 per cent of the island’s GDP.
Fortunately, the maritime industry in Malta has kept away from partisan politics and all administrations have realised and supported the positive value of keeping it apolitical. It should be acknowledged that the industry can be more efficient and, therefore, more profitable if the administration were to focus more on how to energise it, possibly implementing long-term planning with a holistic approach, taking into account Malta’s very limited geographical constraints; the environment needs to be considered for an appropriate balance.
The local maritime industry has come a long way but the opportunities that still need to be tapped are enormous and time is of the essence.
Thomas Sullivan is director of Seatrans Shipping Ltd.