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Royal Vopak UAE Fuel Venture to
Reclaim Land in Oil Trading Push

DUBAI — Royal Vopak NV’s oil products storage joint venture in the United Arab Emirates may increase capacity by about 50 per cent after reclaiming coastal land to gain a bigger share of the region’s fuel trading market.

“We’re currently working with the Fujairah municipality on a land reclamation project,” Walter Moone, the terminal’s general manager, said in an interview on November 18. The project will give the venture space to add about 1 million cubic meters of storage facilities, he said.

Vopak Horizon Fujairah Ltd. is already planning on raising capacity to 2.1 million cubic meters from 1.5 million cubic meters, a project it aims to complete by the end of 2011 pending a final investment decision as early as this year, he said. The land reclamation may be finished by the end of 2010 during which the venture will study whether to add capacity there, he said.

Companies are expanding storage at Fujairah, one of seven sheikdoms in the UAE, on the expectation a new crude pipeline from Abu Dhabi and growing regional demand for refined products will boost traffic. Fujairah abuts the Arabian Sea, allowing tankers to avoid the Straight of Hormuz, the narrow passage into the Gulf between the UAE, Oman and Iran.

Market Growing

Rotterdam-based Vopak and Dubai’s Emirates National Oil Co. each own 33 per cent of the venture, while Fujairah holds 22 per cent and the Kuwaiti company International Petroleum Group the rest. Traders can buy oil products out of storage for sale in the Gulf region or for shipment once they’ve reached Fujairah. The port also serves as a refueling hub for ships.

“The market in the region is growing and our expectation is that Fujairah will continue to grow as a hub for liquid petroleum products,” Moone said.

Vopak Horizon is set to take its first ship at two tanker berths it’s completing next month, adding to the terminal’s four spots and a remote filling buoy. The terminal may need more berths to serve the 1 million cubic meters of storage that could be expanded after the land reclamation project is completed. GPS Chemoil, a joint venture between Singapore-based fuel supplier Chemoil Energy Ltd. and privately held GPS, will lease space at the Port of Fujairah for 580,000 cubic meters of new storage capacity, the facility’s General Manager Tarun Arora said.

Strategic Location

“Developing Fujairah as a fuel and crude oil hub will finally exploit the strategic location of Fujairah,” Arora said at his office on November 18.

Vitol Group, a Dutch-based commodities trader, has more than doubled its storage terminal to 1.1 million cubic meters at Fujairah while OAO Lukoil, Russia’s second-biggest oil producer, is looking at the emirate as it seeks to add storage in the region, Gati Al Jebouri, chief executive officer of the company’s trading unit, said on November 4.