Construction of the new oil storage facility in Fujairah is expected to be completed within 24 months. (AP)
The UAE has become the second largest among emerging markets to expand its oil storage capacity and will register an annual growth rate of 9.3 per cent during the next three years, according to a recent report published by Global Data.
The UAE currently constitutes about 1.6 per cent of the global storage capacity.
The report titled, Global top 10 emerging oil storage markets – market analysis, capacity forecasts to 2015, said emerging markets constitute 26 per cent of the global storage. The UAE, which is placed after China is followed by India, Canada and Iran.
Driven by the rising demand for oil and petroleum products, increased port trade and oil supply security, the storage markets are likely to grow at an average annual growth rate of 6.9 per cent during 2009-2013.
The port of Fujairah is gradually developing from being a regional logistics hub into a global hub for oil products, leading to increasing international trade flows and growing demand for storage, blending and transshipment services.
The port has been witnessing increased port trade and there is an ongoing expansion of oil storage facility. Several companies are expanding their storage facilities within the port and the capacity is expected to more than double by 2012.
"Its strategic location coupled with its growing importance as a refueling and re-export destination for fuel oil and other petroleum products have boosted port trade. The trading activities have created demand for additional storage capacity. Two new storage terminals are being planned in Fujairah, which will increase the storage capacity by 3 MMCM in 2013," said the report.
Aegean Marine Petroleum Network, a supplier and marketer of refined marine fuel and lubricants, is planning to build an in-land storage facility in UAE after entering into a 25-year terminal lease agreement, which includes an option for an additional 25 years, with the municipality of Fujairah.
Construction of the new facility, which will total about three million barrels in capacity, is expected to be completed within the next 18 to 24 months.
Aegean Marine intends to lease a portion of the facility upon completion to a third party, which is expected to generate incremental income in addition to the company's core physical supply operations.
Vopak Horizon Fujairah last month announced its decision to expand its terminal in the UAE by 606,000 cubic metres to meet market demand. Following completion of the expansion the total storage capacity will be more than 2.1 million cubic metres The expansion is expected to be complete by the first quarter of 2012. The expansion consists of 20 new tanks with sizes ranging from 20,000 cubic metres to 40,000 cubic metres for the storage of fuel oil and clean petroleum products.
Earlier this year the Swiss-based commodity trading house, Aurora started civil works on a 635,000 m3 oil products storage terminal at the port. Aurora said it will be an independent terminal operator offering storage capacity to third parties. GPS Chemoil, a joint venture between Singapore-based fuel supplier Chemoil Energy and privately held GPS, said work on its expansion is nearing completion. Tarun Arora, General Manager at GPS Chemoil yesterday told Emirates Buisness that its own expansion is set to increase its storage capacity to about 600,000 cubic metres. GPS Chemoil has nine storage tanks with 95,000 cubic metres of capacity now.
Commenting on the ongoing expansion plans at the Fujairah port he said: "Given the current ongoing expansion by various companies the capacity will definitely increase by an additional three million cubic metres. However, several companies have not yet started work on many of the announced projects and once they start it will increase by another million cubic metres," he said.
Meanwhile, the report, said that China is the major contributor to the growth in emerging markets and is growing at an average annual growth rate (AAGR) of 12 per cent and accounts for 8.9 per cent of the global storage capacity. India is the third fastest growing market with an AAGR of 4.5 per cent during 2009-2013 and a global market share of 1.6 per cent.
The import dependent, developing Asian countries – China, India, the Republic of Korea and Singapore – are driving the growth of the oil storage industry in emerging markets.