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Fujairah Storage Doubling up

Fujairah, one of the seven emirates that make up the United Arab Emirates (UAE), is looking to double third-party oil storage capacity to 10mn cm by the end of 2015, writes David Hayes.
• Fujairah’s role as a major global oil storage and trading hub is poised to grow over the next few years as ambitious plans to build new third-party oil terminals and expand existing storage terminals are implemented. New tank farm facilities planned for completion this year will raise the emirate’s oil storage terminal capacity by an extra 1.6mn cm. This will boost total oil terminal capacity to 7mn cm by the end of 2013, a 30% increase compared with the estimated 5.4mn cm of storage capacity in operation at the end of 2012.
• Furthermore, this figure is expected to rise to 10mn cm by the end of 2015. Until recently almost all storage terminal capacity in Fujairah was built for bunkering use. However, this pattern is changing, and much of the current storage terminal construction boom is in response to rising oil production in the Middle East to meet growing international demand, especially from India, China and south-east Asia. Middle East domestic demand for oil is also growing, with a number of new refineries planned for construction by Arabian Gulf states, including one in Fujairah itself.

• At present, 12 companies already operate or are planning to construct oil terminal facilities in Fujairah. Almost all of these offer third-party storage facilities. Storage overcapacity is not expected to be a problem as the various terminal operators are often targeting different customers. Indeed, many of the bulk storage companies have planned their facilities with specific major clients in mind – Socar Aurora Fujairah Terminal (SAFT) has teamed up with Socar of Azerbaijan, for example, while Concord Energy Group is working directly with Sinochem.
• Gulf Petrochem recently became the latest company to open an oil terminal in Fujairah, commissioning the 412,000 cm
Phase 1 of a planned 1.2mn cm bulk storage facility early this year. Around 75% of Gulf Petrochem’s storage capacity is expected to be rented out for third-party use in the long run, while the remaining storage capacity will be used for in-house trading activities by project partner Glencore. However, the actual use of storage capacity will depend on market demand, with more than half of the Phase 1 storage capacity expected to be used for bunkering initially.
• Much of the oil products expected to fill the new terminal’s capacity will come from Indian refineries, the Middle East and south-east Asia for eventual supply to worldwide markets. Meanwhile, apart from Gulf Petrochem’s new terminal, elsewhere in Fujairah Port Aegean Oil’s new 465,000 cm capacity storage terminal is also due to be commissioned in 2013. Further storage capacity will be added later in 2013 when Phase 1 of the IL&FS Prime Terminal consisting of 15 storage tanks providing 330,000 cm of storage capacity enters service.
• Strategic choice
The choice of Fujairah by international terminal operators and trading companies to build new storage terminals is due to the emirate’s strategic location near major oil producing countries and just outside the Strait of Hormuz. The Fujairah Offshore Anchorage Area offers safe, deepwater anchorage in UAE territorial waters. In addition, oil tankers can moor in Fujairah while waiting to collect cargoes inside the Arabian Gulf without having to pay war risk premiums to insurance companies that are levied once ships enter the Strait of Hormuz.
• Fujairah is already the world’s second largest bunkering centre due to ship owners taking advantage of waiting time for bunkering. Located on a busy international shipping route, almost 40,000 vessels are estimated to pass the emirate on their way into and out of the Arabian Gulf each year. ‘Fujairah is most strategically located for oil and it’s fast growing like Singapore, Rotterdam and Houston. It will be a major oil port, ‘If you look at it in totality, it is a very suitable and strategic location for oil storage. The port facilities and the port expansion are being done by the government of Fujairah. They want a complete oil hub.’The government’s decision to construct modern port terminal infrastructure with high capacity liquid cargo discharge and loading facilities is playing an important role in attracting international storage terminal operators to invest in the emirate.

• Facilities in the Port of Fujairah currently include seven berths with a combined length of around 2,000 metres able to accommodate six large vessels or 13 small tankers. Some 52 marine loading arms are installed in the port, while the central matrix manifold is designed to connect all storage terminals to all the berths and to interconnect all storage terminals with each other as well. The Fujairah Port Master Plan calls eventually for 21 berths to operate in the oil port basin and adjacent breakwater. These will include berths with a 23- to 25-metres draft designed to accommodate VLCC (very large crude carrier) tankers. Separately, Vopak operates six independent berths and has one single point mooring (SPM) for loading and discharge from its recently expanded storage Gulf Petrochem’s Fujairah storage terminal Source: Gulf Petrochem terminal.