Millions of barrels of oil stored in tanks and ships in Asia and Europe has become caught in a web of lawsuits related to trade and financing deals by Singapore’s Hin Leong Trading (Pte) Ltd, according to court documents and shipping data, as reported by Reuters.
A report filed in Singapore’s High Court also found Hin Leong obtained financing from various banks for cargoes of oil which did not exist, complicating the competing claims of ownership.
The oil inventories that Hin Leong did have include diesel on three tankers that arrived fully loaded in Europe last month, and which have since been floating off the United Kingdom and France, shipping data on Refinitiv’s Eikon showed.
Unipec Singapore Pte Ltd, the trading arm of Asia’s largest refiner Sinopec, has sought delivery of diesel aboard the tankers: Very Large Crude Carrier Qi Lian San and two Aframax-sized ships Ocean Voyager and Ocean Taipan – under sales contracts with Hin Leong, PwC said.
The tankers were chartered by Ocean Tankers (Pte) Ltd (OTPL), owned by Hin Leong’s founder Lim Oon Kuin, widely known as O K Lim, and his family. Ocean Tankers has also been placed under administration.
The ownership of the fuel on four floating storage units (FSUs) off Malaysia is also in dispute, the report said.
Among the creditors that have made claims on cargoes on board the FSUs include HSBC, Societe Generale SA, ICICI Bank, Natixis SA, and Credit Agricole Corporate & Investment Bank.
Separately, oil trading companies Winson Oil Trading Pte Ltd, Trafigura, and Glencore Singapore Pte Ltd have requested documents which give proof of ownership on some of the cargoes following deals with Hin Leong.
Collapse Amidst Pandemic
Hin Leong, one of Asia’s largest oil traders, collapsed in April owing US$3.8 billion to 23 banks as oil prices crashed and COVID-19 swept across the globe.
The report by interim administrators PricewaterhouseCoopers found that Hin Leong’s total oil inventory stood at US$212 million as of May 20, less than a third of the US$646 million owed to banks that provided inventory financing facilities.
According to PwC, much of Hin Leong’s oil inventory is “likely to be subject to multiple claims by creditors”. Some of it may be sold to minimise storage costs, but determining ownership of the oil may delay the sale significantly.
The report also stated that more than 270 letters of credit facilities were allegedly used by Hin Leong to get billions of dollars in financing, although in some cases, there was no underlying cargo to secure the funding.
Determining who owns the oil is part of a wider restructuring of Hin Leong, which PwC has said has no future as an independent company after it “grossly overstated” the value of its assets by at least US$3 billion.
According to an earlier affidavit filed at the Singapore High Court, O K Lim also directed the company not to disclose US$800 million in losses over several years.
Singapore police have also launched an investigation into Hin Leong’s losses.