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Concord Energy to build second oil terminal in Fujairah
SINGAPORE-BASED energy trader and oil infrastructure developer Concord Energy is set to build a second oil terminal in Fujairah, the second largest bunkering hub in the world after Singapore.
The Concord Oil Terminal, which will have a capacity of 1.1 million cubic metres for both crude oil and petroleum products, is expected to be the largest facility to come on stream there in the next three years, when it is commissioned in mid-2018.
And like the Fujairah Oil Terminal which the group built and commissioned early last year, the new terminal will also likely be a joint venture with a national oil company, Concord Oil Terminal managing director Raouf Kizilbash told The Business Times.
The firm is in talks with various parties, but discussions are in the advanced stage with one national oil company in particular, he said. "If we can agree on talks, it will likely be a joint venture."
The Concord Oil Terminal will be built on 200,000 square metres of land, adjacent to the 1.18 million-cubic-metre Fujairah Oil Terminal. The latter was a joint venture between Concord Energy and Chinese state-owned company Sinopec.
Fujairah Oil Terminal was the first facility to store crude oil in the United Arab Emirate's Fujairah Free Zone. Concord Energy divested its stake in the terminal last year.
The group plans to start engineering, procurement and construction works for the new crude oil and petroleum products terminal in October. Financial close for the investment is also expected at the end of the third quarter, Mr Kizilbash said.
Concord Energy is now in the process of mountain clearing and land levelling works, which are expected to be completed in the same period too.
Fujairah, located outside the Strait of Hormuz, is being developed as a key logistics and oil and gas hub for the UAE.
According to Ratio Group, a bulk liquid storage consultancy firm, Fujairah has about 7.5 million cubic metres of oil storage capacity.
The Concord Oil Terminal will have about 400,000 cubic metres of crude tanks connected to a new jetty deep enough for very large crude carriers (VLCCs), and have the ability to load or unload vessels at 12,000 cubic metres an hour.
The terminal will also have about 700,000 cubic metres of gasoil, gasoline and fuel oil tanks connected to the smaller jetties.
The market for gasoline storage has been growing in Fujairah, and the facility will have flexible tank farms that can be switched between gasoil and gasoline depending on market demand, said Mr Kizilbash.
The announcement by Concord Energy comes as the lifting of sanctions in nearby Iran boosts demand for storage and blending operations in Fujairah.
Iran, one of the fastest growing economies in the Middle East, currently has insufficient gasoline production capacity, and has to import the fuel.
"To meet this demand, nearby hubs, notably Fujairah, are focusing on gasoline blending for import into Iran," said Ratio Group managing director Ellen Ruhotas in a note. "Until recently, this market was closed to traders, but there is expected to be a big push for gasoline blending to meet this demand."
As a bunkering port, Fujairah handles mainly marine fuel oil, with companies blending it there and supplying to the regional market.
The volume of fuel oil passing through Fujairah will also be given a lift, as larger amounts of fuel oil leave Iran to be blended in Fujairah and elsewhere, said Ms Ruhotas. "It will be some time until Iran will develop a domestic fuel oil blending hub, if at all."