Dubai — Fujairah port, the Middle East's crude products storage and trading hub, put plans on hold to expand its storage capacity because of slumping global demand for crude and products, the port's director general told S&P Global Platts on Wednesday.
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"We were aspiring to invest to expand crude storage, but we have put those plans on hold to see what happens to the market," Captain Mousa Murad said.
Fujairah, which currently has crude and oil products storage capacity exceeding 10 million cu m (about 60 million barrels), had plans to reach up to 16 million cu m in 2023. Current inventories are nearly at capacity, with around 80% of it oil products and the remainder crude, he said.
"Those who are benefiting are in storage, especially those who do not have long-term contracts. They are increasing storage rates," Murad said.
"As a port, we want the stored products to be traded, but trading has dropped."
Fujairah, the eastern emirate of the seven-member UAE, had capitalized on its position outside the strategic Strait of Hormuz in the Persian Gulf to attract investments that have typically gone into bunkering operations. The emirate had planned to boost its profile by adding more refining and crude tankage, among other facilities. Saudi Aramco, Mercuria and other traders have expanded operations there.
The Fujairah Oil Industry Zone, the authority managing the land used for tanks and refining in the UAE emirate, planned to boost reclaimed land by about 7%, or 660,000 square kilometers, over the next 15 to 16 months to boost total area to 10.6 square kilometers, FOIZ director Captain Salem al-Hammoudi told Platts in January. He couldn't be reached for comment on Wednesday.
Part of this new storage capacity planned in Fujairah will come from Abu Dhabi National Oil Co., the UAE's biggest oil producer, which is building the world's biggest single-site underground crude storage in Fujairah's mountains adjacent to the port. The caverns will have three compartments; each can hold 14 million barrels of crude.
ADNOC, which has also set up a new trading arm with Italy's Eni and Austria's OMV, was expected to start trading crude products in the second half of this year from the port of Fujairah.
ADNOC, Eni and OMV have formed a new trading venture, ADNOC Global Trading, at the UAE capital's financial freezone, Abu Dhabi Global Market, and expect to start physical trading this year, ADNOC said in July. Eni and OMV agreed last year to establish a trading joint venture, in which Eni and OMV will own 20% and 15% of the shares respectively.