Vitol Asia is set to place its first floating oil storage facility off Malaysia from May, the sixth in East Asia, to meet strong tankage demand due to heavy flows of fuel oil, industry sources said on Aptil 21.

The facility, a converted very large crude carrier (VLCC) with capacity of about 300,000 tonnes owned by BW Offshore Ltd, is expected to be on a short-term lease of not more than six months and deployed off southern Pasir Gudang port.

BW Offshore managing director and chief executive officer, Svein Moxnes Harfjeld, confirmed that the tanker — the Folk Sea, formerly named the Berge Nisa — is berthed at Singapore’s Sembawang Shipyard for conversion works that are expected to last about two weeks.

“The vessel is presently at a dry dock for upgrading and is expected to be ready by May. It’s going to be on a temporary storage contract while waiting to be converted into an FPSO unit (Floating, Production, Storage and Offloading),” Harfjeld said.

“The vessel will be placed in Malaysian waters and will be used purely for storage, but not blending purposes,” he said but declined to identify the charterer.

Vitol, which is estimated to have about 400,000 cubic metres of leased landed storage capacity in Singapore, has been an active seller in the fuel oil cash market since March. It sold about 300,000 tonnes in the month alone. The strong tankage demand is due to heavy inflows of fuel oil into East Asia since the start of the year and strong trading activity in the benchmark Singapore cash market since March.

Swing Western inflows have averaged at 2.4-2.5 million tonnes monthly since the beginning of the year, well above last year’s average of 1.7-1.8 million tonnes.