Brooge Energy Ltd. has signed an agreement to sublease land to Blue Ocean Energy FZE, on which it will construct a 25,000 b/d modular refinery, according to regulatory filings.
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The deal between the companies was disclosed on the NASDAQ stock exchange and the US Securities and Exchange Commission on July 9.
The refinery is intended to produce IMO compliant, very low sulfur fuel oil, and will be located near the Port of Fujairah, Brooge said.
Blue Ocean Energy will be responsible for building the refinery and financing the cost of construction. Brooge will then be responsible for operating the refinery, earning revenue from tolling fees on a take-or-pay basis. The deal between the two firms includes a tolling contract of 20 years, consisting of a five-year contract to commence upon completion of the construction of the refinery, and three renewal periods of five years each, Brooge said.
"The modular refinery will be focused on producing VLSFO and will be fully compliant with the new IMO 2020 very low sulphur rule," Nicolaas Paardenkooper, CEO of Brooge Energy, said. "With the UAE adding to its oil production capacity, which we anticipate will drive demand for refining services for both the domestic and export market, we believe this is an opportune time to enter this segment of the oil industry."
Blue Ocean Energy FZE could not immediately be reached for comment.