Arab Today, arab today new pipeline and refinery projects strengthen bunker port appeal
Last Updated : GMT 14:00:32
Arab Today, arab today
Arab Today, arab today

New pipeline and refinery projects strengthen bunker port appeal

Arab Today, arab today

Arab Today, arab today New pipeline and refinery projects strengthen bunker port appeal

Abu Dhabi - Arabstoday

Strategic location, lower risk and relatively less congestion are factors that have led to the emergence of Fujairah as the second-largest bunkering port in the world after Singapore and positioned it as a major maritime hub for the region\'s oil exports, say experts. With the passage of tankers through the Strait of Hormuz being prone to risks due to geopolitical tensions in the region, Fujairah sensed the opportunity well in time to transform itself into one of the world\'s top tanker refuelling and oil storage hubs. In the event the Strait of Hormuz is shut, Fujairah opens up an alternative route for the region\'s oil tankers to carry on with their business, unperturbed. Fujairah\'s unique selling proposition is that location-wise it provides a direct access to open sea the Indian Ocean for crude oil and oil product exports. As matters stand, a 370-kilometre pipeline expected to be commissioned in the fourth quarter of 2011 will carry around 1.5 million barrels per day of crude oil from Abu Dhabi\'s onshore Habshan field to the port of Fujairah for exports. In addition, a proposed 200,000 barrel per day refinery in Fujairah scheduled to be commissioned by mid-2016 will allow Fujairah to become a major hub for oil and petroleum product exports, catering to the booming demand from Asia and other Middle East countries. Adding to Fujairah\'s appeal is Dolphin Energy\'s gas pipeline which transports some 2 billion standard cubic feet (bscf) of gas per day and culminates in the emirate. Provision has been made to expand Dolphin\'s gas production from Qatar to 3.2 bscf per day, subject to future agreement by Qatar authorities. All three multi-billion dirham projects are Abu Dhabi\'s initiatives. While the oil pipeline and the proposed refinery are supported by Abu Dhabi-based International Petroleum Investment Company (IPIC), Dolphin pipeline is a strategic initiative of the Abu Dhabi government to create long-term economic wealth and new business opportunities for GCC citizens. \"The oil pipeline and refinery are high-investment projects, but they are also going to bring in high returns. They will prove beneficial for the UAE economy as serving regional and world markets will bring in royalty and employment opportunities for the nationals,\" said Mohammad Amerah, an Abu Dhabi-based economist. \"In normal times, the opening of the new sea route for tankers is going to reduce congestion in the Strait of Hormuz,\" he added. \"As the world\'s light oil supplies run out, the future lies in heavy residue oil bunker fuel. There will probably be major futures contracts on bunker fuels in the future,\" said Dalton Garis, Associate Professor of Economics and Petroleum Market Behaviour at Abu Dhabi\'s Petroleum Institute. Sensing the opportunities that exist in Fujairah, Vitol, the world\'s largest independent oil trader, has moved in to set up storage facilities in the emirate. Its storage facilities at the port makes up about a third of Fujairah\'s total capacity of 3 million cubic metres, which is expected to soar to over 7 million cubic metres by 2012. Oil majors such as BP, ConocoPhillips and Litasco, Lukoil\'s trading arm, are eyeing future demand, and have secured space in an upcoming expansion due to come online this year. Chinese oil major Petro-China is also in talks with the Fujairah government for storage facilities of up to a million cubic metres. One key risk that could cloud Fujairah\'s future, however, is pricing. Handling fees for the vessels are set by the port authority and vary according to the size of the ship, while bunkering and oil storage activities are operated by the individual private companies. Some Gulf countries are major exporters of crude oil but many also import fuel oil, much of which is stored, blended and re-exported from Fujairah. \"The port fees have to be attractive enough for the tankers to tie up with the port, but high enough for Fujairah not to leave any revenue money on the table,\" said Garis. While most of the existing tank capacity has been built by local companies, the new investments are largely being undertaken by foreign firms. In addition, the Port of Fujairah is also building new berths that will help with the export of oil products, including its new oil terminal 2, which will open in the first quarter of 2012. In April, His Highness Shaikh Hamad Bin Mohammad Al Sharqi, Supreme Council Member and Ruler of Fujairah, issued an Emiri decree establishing the Fujairah Zone for Petroleum Industry. The zone will deal with matters related to all petroleum affairs and products and hydrocarbon industries including oil and gas along with providing infrastructure and facilities, buildings, and administrative services to investors. From / Gulf News

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