London — Fujairah's status as a global trading hub took another leap forward asUAE-based Brooge Petroleum and Gas Investment Company (BPGIC) said this weekit plans to boost storage capacity for crude and oil products.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
BPGIC, one of the largest holders of storage assets in the Emirate, said itaims to expand its storage terminal by 600,000 cu m of capacity for crude oilby the second quarter of 2019. This would take storage up to the 1 million cu m mark.
The port of Fujairah, strategically positioned at the start of Strait ofHormuz, has had a rapid rise to prominence as a hub for trading, storage andbunkering of regional, and increasingly global, significance.
The Emirates is already established as one of the largest bunkering andstorage centers in the world, ranking alongside the likes of Rotterdam andSingapore, and is set for further projects in port facilities and petroleumstorage to emerge in the next few years.
It wants to boost storage capacity to 14 million cu m by 2020 from 10 millioncu m, and the rise of companies such as BPGIC is an important milestone.Fujairah storage capacity has grown from just over 3 million in 2010 in whathas been an astronomical rise. Analysts believe Fujairah will continue to growin the coming years.
The rise of Fujairah has been on the crest of a larger wave from the MiddleEast.
Long-known as the world's key region for production and export of crude, acombination of dynamic economic growth, rising demand and major investments inrefining capacity have seen the Middle East emerge as a growing influence inthe global refined products trade. Fujairah is one of two major ports in theregion along with Oman's Sohar and is a busy refueling point for tankers.
Independent crude oil storage capacity with crude blending options will becomemore important globally in coming years and BPGIC says its facilities excel inproduct blending.
The storage market is set for turmoil in 2020 as the International MaritimeOrganization's global marine fuels sulfur cap drops to 0.5% from 3.5%,shifting the majority of bunker demand away from fuel oil.
The change is likely to be highly disruptive in the short term as demand forfuel oil storage drops rapidly. A more fragmented bunker market is set toemerge in 2020 with a wide variety of 0.5% sulfur products on offer, requiringa larger amount of smaller clean-product tanks to store them.
In the longer term the change is likely to be favorable for Fujairah as itbenefits from ample supplies of middle distillate-based 0.5% sulfur bunkersfrom complex refineries in the Middle East.
Bunker ports in Europe may struggle more as insufficient distillate suppliesin the region mean their 0.5% sulfur fuel prices are likely to be higher thanthose in the Middle East and Asia.
"IMO 2020 is going to drive the dynamics of the market for the next 18-24months, so being able to cater to that is going to be paramount," Vitol'sChris Bake said during London's IP Week.
Bunker demand at Fujairah dropped sharply last year as the Qatari diplomaticcrisis meant Qatari owned and flagged vessels could no longer refuel there.Total bunker demand slipped to 8-9 million mt in 2017 from 11-12 million mtthe previous year, according to traders' estimates.
--Paul Hickin, email@example.com
--Jack Jordan, firstname.lastname@example.org
--Edited by Jeremy Lovell, email@example.com