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ADNOC could follow Saudi Aramco with oil trading office in Fujairah: sources

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ADNOC could follow Saudi Aramco with oil trading office in Fujairah: sources

London — ADNOC could soon open an oil trading office in the eastern UAE port of Fujairah, sources told S&P Global Platts, as it looks to follow Saudi Aramco's trading arm in grabbing a greater slice of the action in the world's second largest bunkering hub.

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ADNOC, the Abu Dhabi state-owned company, has long eyed a trading office in Fujairah, given the port's growing storage capacity, a source familiar with the matter said. "I think it will be soon, hopefully," the source said, referring to a decision on opening a trading desk in the port town.

Aramco Trading Co, an arm of Saudi Arabia's state-owned oil giant, announced late Monday that it has established a Fujairah office as part of its expansion plans to boost trading volumes to 6 million b/d by next year -- 50% more than in 2018.

That would propel the company into the top tier of global fuel-trading companies.

It comes as some of the world's biggest producers are increasingly focusing on expanding their crude and products trading arms to adapt better to shifts in trade flows, with Middle East national oil companies battling for market share in demand-hungry Asia.

Fujairah, strategically located outside the volatile Strait of Hormuz chokepoint, will have a large role to play, with the port expanding its capacity to handle and process some 100 million mt a year of crude oil and petroleum products.

"We have been in Fujairah for a number of years and as our trading business expands globally --between Singapore, Saudi Arabia, London, Houston -- we trade across different time zones, and [with] Fujairah as the center of our blending operations, we thought it is important to be here, physically doing trading as a business in Fujairah," Aramco Trading's chairman and Saudi Aramco's head of downstream Abdulaziz al-Judaimi said.

Aramco, which has leased storage space in Fujairah, has already been trading some 350,000 b/d of gasoline and fuel oil from the port, according to company officials. The new office, dubbed Aramco Trading Fujairah, will handle all gasoline and fuel oil storage and blending activities.

The company could not be reached for comment on whether it plans to build new storage space at the port or continue to lease facilities.

Among the major tank operators in Fujairah, Vopak Horizon Fujairah owns about 2.6 million cu m of oil storage, while Vitol owns 1.6 million cu m of storage, as well as a 90% stake in the 80,000 b/d Fujairah Refinery.

Fujairah Oil Terminal FZC owns a 1.2 million cu m oil storage facility, and Brooge Petroleum & Gas Investment Co. has 400,000 cu m of oil products storage and is building 600,000 cu m of additional capacity for crude oil, along with a 250,000 b/d refinery that it says will begin its first phase of operations by the first quarter of next year.

Fujairah is also the terminus of ADNOC's 360-km (223-mile), 1.8 million b/d pipeline carrying crude from Abu Dhabi to the port for export. In addition, ADNOC is building a 42-million-barrel underground crude storage facility, the world's largest, in Fujairah.

Just year ago, ADNOC announced the formation of its own trading unit to further maximize value from its production and is now hiring traders.

"The talk is there, and I think it is coming," another source told Platts. "They're looking to build the team."

-- Paul Hickin, paul.hickin@spglobal.com

-- Herman Wang, herman.wang@spglobal.com

-- Edited by Jonathan Dart, newsdesk@spglobal.com