GPS Chemoil says 'major' oil companies want new crude storage at Fujairah

Dubai — GPS Chemoil has received inquiries from several "major" oil companies to build and then lease them new storage capacity for crude oil at Fujairah in the UAE even as the coronavirus pandemic has delayed signing a contract, general manager Tarun Arora told S&P Global Platts on Thursday.

"We are progressing with feasibility and discussions," Arora said. Capacity could be built in phases, with total storage of up to 6 million barrels of crude, he said.

GPS Chemoil would build the crude oil tanks on the basis of a commitment to lease storage over 7 to 10 years, Arora said. "We will build not on speculation but only against a committed contract," he said. The whole process could take two years after signing and would be financed locally, he said, adding that the Fujairah government supports such projects.

"The UAE has been working for some time to create a benchmark for oil pricing out of Fujairah, and this is driving a lot of interest and investment," Arora said. "The government has acted with great foresight and as a consequence the necessary infrastructure is already in place to support more crude oil capacity."

Abu Dhabi National Oil Co., the UAE's biggest oil producer, is building the world's biggest single-site underground crude storage in Fujairah's mountains.

Fujairah's current storage capacity is about 20 million barrels of crude oil and 40 million barrels of refined oil products. GPS Chemoil has capacity to store 4.4 million barrels of refined products in 30 tanks in the emirate, and currently they are 100% leased out, Arora said.

The eastern emirate of the seven-member UAE has capitalized on its position outside the strategic Strait of Hormuz in the Persian Gulf to attract investments that have typically gone into bunkering operations. Saudi Aramco, Mercuria and other traders have expanded operations there.