Abu Dhabi: Fujairah is set to become a global oil storage and trading hub due to its unique location as well as access to pipelines for crude, a top executive of Brooge Petroleum and Gas Investment Company (BPGIC) said.
“Fujairah is number two globally in bunkering (supply of fuel to ships) after Singapore and ahead of Rotterdam,” said Nicolaas Paardenkooper, CEO. “It is in a unique location right in the middle of the shipping lines between east and west and is in deep water with good connectivity for all the companies as well as access to refining capacity.”
BPGIC founded in 2013 is one of the largest holders of storage assets in Fujairah. It completed the first phase of 400,000 cubic meters of storage across 14 tanks for middle distillates (refined oil product) and fuel oil and went operational in January last. Work is on for the second phase, which will add 600,000 cubic meters of capacity for crude oil across eight tanks and expected to be completed in Q1-2020.
Paardenkooper expects demand for oil storage to go up in Fujairah due to the UAE’s plans to boost exports as well as growing demand for crude from India and China. “The UAE made a pipeline from the Habshan fields in Abu Dhabi all the way to Fujairah, and on a daily basis 1.5 million barrels of oil is passing through the pipeline into the port of Fujairah thanks to Adnoc,” the CEO said. “The UAE is also boosting exports and that justifies the need for additional storage in Fujairah for third-parties.
“We are an independent storage provider and it means that we can store products for any customers, be it one of the oil majors or a global trader.”
Brooge has three offices — in Fujairah, Abu Dhabi and Dubai and considering further expansions. “We are looking for markets where our business model can be implemented and grow our business. Our facilities are modern and we have systems in place more related to IT. We can do operations handling or ship handling much faster compared to our peers in the market.”
When asked about IPO (initial public offering) plans, he refused to divulge details. Reuters had reported that BPGIC is planning to float 40 per cent of its capital on the London Stock Exchange and raise $400 million from Emirati and foreign investors.
Nicolaas Paardenkooper has over 35 years of experience in the energy industry and served as terminal manager at Oiltanking Odfjell Terminal (Oman) and at Emirates National Oil Company. He also worked at tank storage firm Vopak for 21 years. As CEO of Brooge Petroleum and Gas Investment Company, he is responsible for the strategic growth and financial performance, apart from ensuring high levels of safety are maintained at the facilities.
Fujairah’s perfect location
Fujairah is strategically located on the UAE’s East coast, at the crossroads of shipping lines between East and West. It has emerged as an important place for bunkering as well as storage of crude and refined products. Ships halt at Fujairah for refuelling because of its strategic location.
The government wanted to attract bigger ships at Fujairah Port and boost the investment climate in the emirate. A Very Large Crude Carrier (VLCC) jetty opened in 2016 for oil carrying super tankers to berth at the port for crude shipment. The new facility will help the UAE and other Gulf countries to supply oil securely to the rest of the world bypassing the Strait of Hormuz, which Iran had threatened to close and disrupt if the US imposed restrictions on the export of its oil.
The UAE also built a 370-kilometre pipeline connecting Habshan in Abu Dhabi and Fujairah with a capacity to transport 1.5 million barrels per day of crude oil. It was built in 2012 at $4.2 billion by International Petroleum Investment Company (IPIC), which is now merged with Mubadala Investment Company.
Abu Dhabi Ports is also investing in Fujairah and signed a 35-year concession agreement to develop, manage and operate Fujairah port.