Fujairah plans storage, refining projects as it reclaims more land

Fujairah — Fujairah, the biggest bunkering hub in the Middle East, is about to reveal plans for new storage and refining projects as it reclaims more land to make way for future demand, an official has told S&P Global Platts.

Fujairah, the eastern emirate of the seven-member UAE federation, is capitalizing on its position outside the Strait of Hormuz to attract investments that have typically gone into bunkering operations. The emirate now wants to boost its profile with additional projects.

Currently Fujairah has crude and oil product storage capacity in excess of 10 million cubic meters, with plans to reach up to 16 million cubic meters in 2023.

Fujairah Oil Industry Zone, the authority managing the land used for storage and refining in the emirate, will announce details of the new projects soon, Captain Salem al-Hamoudi, who is FOIZ director, said in an interview. The plans this year are likely to be for "more tankage [mixed products and crude] and refinery," he said.

FOIZ will expand the available land by about 7% and reclaim some .66 sq km from the sea in the next 15-16 months, which will boost the total area to 10.6 sq km. Around 30% of the reclamation is complete, he said.

In addition to crude storage, "derivatives are there already and we are aiming nowadays for LPG, LNG and petrochemicals as well as adding more refining capacity. This is the basket we are aiming at for the new land," al-Hamoudi said.

Fujairah currently has two major refineries, both of which can produce low sulfur fuel oil in compliance with the International Maritime Organization's new rule limiting sulfur content to 0.5%, down from 3.5%.

Vitol's refinery has a processing capacity of up to 82,000 b/d. Uniper's facility can refine 67,000 b/d and produce about 3.6 million t/year of marine fuels with sulfur content as low as 0.1%, according to its website. UAE-based Brooge Petroleum and Gas Investment Co. is building a 24,000 b/d refinery that will produce mainly low-sulfur fuel oil from the first quarter of this year.

The pivot toward cleaner fuels has also prompted Fujairah to consider using LNG as bunkering fuel in future and it is holding discussions with possible investors about this project, which will be launched once there is a demand for the commodity, al-Hamoudi said.

Capacious mountains

Part of the additional capacity to store crude and products will come from Abu Dhabi National Oil Co., the UAE's biggest oil producer. The company is building the world's largest single-site underground crude storage in Fujairah's mountains adjacent to the port. The caverns will have three compartments, each able to hold 14 million barrels.

Fujairah would like to replicate this idea and invite other national oil companies to store their crude in the emirate's mountains, according to Captain Mousa Murad, the port's general manager.

"We are thinking about how we are going to sell underground storage in place of tank storage because right now we do not have enough land," Murad said in a separate interview recently.

"The mountains are available especially for big companies. It may also be cheaper and safer."

Besides ADNOC, some of the other big oil companies operating in Fujairah include Saudi Aramco, which opened a trading office in the emirate last year.