Crude oil storage facilities at Fujairah are expected to have a capacity to hold around 10 million cubic meters once major additions are completed, and authorities are in talks for further projects, according to the director of the Fujairah Oil Industry Zone.
Currently there is more than 10 million cubic meters of crude and oil products storage capacity at Fujairah, most of which is for oil products, but additions from Abu Dhabi National Oil Co. and two other UAE companies will help boost crude storage, Captain Salem al-Hamoudi told Dubai-based Gulf Intelligence in an interview posted July 7. Fujairah Oil Industry Zone or FOIZ is the authority managing the land used for storage tanks and refining in the eastern UAE emirate.
“We are discussing few potential [storage] projects which we hope to materialize during the course of this year,” said Hamoudi. “We are trying to diversify the activity from traditionally mainly towards products and now there is more storage being added towards crude.”
ADNOC is developing underground caverns at Fujairah that will be able to store 42 million barrels (6.72 million cu m) of crude oil and are expected to be finished in 2022. UAE-based Ecomar and Brooge Petroleum and Gas Investment Co. or BPGIC are also expanding their storage facilities at Fujairah, which is located outside the key shipping chokepoint of the Strait of Hormuz.
Healthy demand
Storage in Fujairah, the world’s No. 3 bunkering hub, is enjoying strong demand, buoyed by high throughput volumes at the port and FOIZ, Hamoudi said.
“If we talk about the storage side of Fujairah, again it’s been witnessing a very healthy demand, and if anything, there is most of the time shortage of storage space here,” he said.
Brooge Energy, the parent company of BPGIC, said in a June 2 US regulatory filing that three customers renewed oil product storage contracts at Fujairah for 233,072 cu m, at rates that are 70% higher than the starting fixed lease storage price of the earlier contracts.
“We continue to experience strong demand for our facilities as, particularly, Fujairah in the Middle East proves itself to be a significant oil storage hub, as a result of the continued lead taken by the region in the production of crude oil and its increasing refining capacity,” Nicolaas Paardenkooper, CEO of Brooge Energy, said in the filing.
Crude links
ADNOC may also link its crude facilities to the port’s matrix manifold system, which allows transfer of volumes between terminals without the need to charter a ship, Hamoudi said.
“All the oil terminals in Fujairah are connected though the matrix manifold which is adding a great deal of flexibility and efficiency to the operations,” he said.
“When it comes to crude, ADNOC I believe is considering having that added flexibility. I believe it is ongoing and should be completed during this year. It is a very positive move and we are looking forward to it.”
ADNOC could not be immediately reached for comment.
New Terminal owner
A new terminal owner is expected in Fujairah as India’s ILFS concludes the sale of its facility at the port, Hamoudi said.
The deal is pending approval from ILFS in India, which may take until September or October, a source directly involved in the matter told S&P Global Platts. “The process is still on,” the person said, adding that the proposed buyer is a “major player” in Fujairah.
The IL&FS Prime Terminals FZC (IPTF) bulk petroleum storage terminal at Fujairah has capacity to store 333,484 cu m of refined oil products and is one of 13 companies that reports weekly inventories to FOIZ.
The terminal was put on the block in February after India’s government took over Infrastructure Leasing & Financial Services Ltd in October 2018 as several of its group companies defaulted on some loan obligations.
Source: Platts