Dubai to Challenge Singapore in $25 Billion Marine Oil Market Dubai plans to challenge Singapore in the $25 billion market for marine oil by setting up an exchange that will allow futures trading in marine oil at the port of Fujairah, one of the world's top three fuel stops for ships. The government-run Dubai Metals & Commodities Centre will set up the electronic exchange later this year, initially trading in gold and silver, and then marine oil, David Rutledge, the center's chief executive, said in an interview in Dubai last week. ``By giving traders more opportunity to play the market, Fujairah could take some business from Singapore, especially for tankers,'' Simon Neo, a marine oil broker with Singapore-based Wilhelmsen Bunkers, said in a telephone interview. Buyers and sellers of marine oil at Fujairah currently can only trade in physical quantities, unlike Singapore's unregulated informal market, where traders can hedge their risks by betting on future prices. Fujairah, a member of the United Arab Emirates federation that lies outside the Persian Gulf on the Indian Ocean, vies with Rotterdam for the No. 2 slot in the marine fuel market. The fueling business at Fujairah, a mountainous emirate that lies at the mouth of the Persian Gulf, began during the 1980-1988 war between Iraq and Iran, when both sides targeted international shipping in the Gulf. Last year, Fujairah handled about 12 million tons of fuel oil for ships worth more than $2 billion last year, according to the government-run Port of Fujairah. Singapore's marine fuel market grew 13.3 percent last year to 23.6 million tons, or almost twice as much as Fujairah, according figures from to the country's Maritime and Port Authority. Container shipping lines use futures contracts to manage fuel costs. More traders are dealing in oil futures as prices surge. Crude oil reached a record $58.28 a barrel in New York on April 4. Uphill Struggle Still, getting enough companies to use Dubai's planned futures exchange to ensure that buyers always have sellers and vice-versa may not be easy ``because it's very difficult for people to change,'' said George Gaviotis, director of Oil Marketing & Trading International, in an interview at an annual ship fuel conference in Fujairah on April 12. Oil Marketing sells about 30,000 tons a day of fuel oil in Fujairah. Six companies including Dubai government-owned Emirates National Oil Co. and Sharjah-based FAL Oil Co. have licenses to trade in marine oil in Fujairah, which each year receives more than 6,000 ships at its offshore storage facilities. Close to 75 percent of the vessels are oil tankers, including very large crude carriers, which can haul as much as 2 million barrels of oil. Tankers leaving the Gulf through the Strait of Hormuz between Iran and Oman's Musandam peninsula carry an average 15 million barrels a day of crude oil, equivalent to almost 20 percent of world demand, says the U.S. Energy Information Administration. Fujairah's Cheaper Marine oil prices in Fujairah are generally cheaper than those in Singapore because the emirate's supplies come from the region, site of the more than 60 percent of global oil reserves. ``Having a futures contract for Fujairah will give the Gulf its first marine oil benchmark that will reflect local conditions rather than those in Singapore,'' said Omar Najia, a trader with Dubai-based BB Energy. The price of 180-centistoke marine oil in Fujairah averaged $206.67 a ton during the past six months, compared with $210.78 a ton in Singapore, data compiled by Bloomberg show. The cost of 380- centistoke bunker fuel rose to a record $274 a ton on April 8. Centistoke is a measure of the fuel's viscosity or the ease with which it flows. Regional demand for marine oil may rise as Saudi Arabia, Iran and other Persian Gulf oil producers seek to export more oil and natural gas, said fuel oil traders in Fujairah. Qatar, the site of the world's third largest natural gas reserves, will order more than 60 vessels to carry gas that's cooled to a liquid for export by ship to markets in Asia including Japan and South Korea, the emirate's energy minister, Abdullah bin Hamad al-Attiyah has said. These vessels will add about 4.5 million tons a year of marine oil demand by 2007, Hussain Sultan, chief executive of Emirates National, said in an interview. Emirates National, or ENOC as it's also known, supplies about a third of Fujairah's fuel oil needs. PIN/BLOOMBERG