Energy Company North East Gas and Oil Services Ltd has secured $93.8 million USD for the construction of 1,034,000 m³ cubic meter capacity oil storage terminal comprising two tank Farms in the Fujairah free zone of the United Arab Emirates.
In securing this facility, North East Oil and Gas Services Ltd have been assisted by Quinlan Capital Financial Services Group to structure the financing provided by a consortium of Chinese Lenders.
The loan, which does not involve contributions from the shareholders, has been arranged using a long-term credit instrument and is compatible with other financing sources available to the company.
The construction of the two-tank farms will be carried out in two phases. The first phase of the project will be the construction of the first 500,000 m³ storage capacity tank for various petroleum products while the second phase of the project will be for the construction of the second 534,000 m³ tank for crude oil storage. In addition to the tank farms, other infrastructures will also be situated in the facility, including an office complex, piping, pump station, power, water supply, matrix, etc.
The company has applied to lease a plot of 106,737.2 square meters of land and has secured licenses from the Fujairah authorities for the construction and future operation of a tank farm as well as a waste oil refinery.
Speaking during the project plan presentation, Chairman and CEO of North East Gas and Oil Services Limited Andrew Douds said "We are here today because we have achieved 95 per cent, in terms of funding for the project. You will all agree with me that raising $93 million for a startup in this clime is not an easy task. Thanks to Peter Vanderslice the Managing Partner at Quinlan Capital and Financial Services Group whose ingenuity and resourcefulness made it possible for us to raise the capital we need for this project within this short period. Without his support, it would have been impossible for us to achieve this. North East Gas and Oil Services Ltd is committed to our vision of providing high-quality services, as well as supporting the local UAE economy, as we grow our expertise in global energy storage".
When completed, the tank farm storage facilities will be used to store different types of crude oil and will provide increased flexibility to export crude through Fujairah’s Arabian Sea oil terminal and create additional employment opportunities for UAE nationals.
Fujairah is one of the world's largest bunkering hubs with a record year of oil-handling volumes of 11.47 million barrels (1.81 million tonnes) per week in 2022 and has registered robust demand for storage in 2023. The record increase can be attributed to the Russian fuel oil which is flooding the Port since last year, with little signs of abating despite the latest price caps on Russian oil products. Russia has been selling crude and refined products at discounted prices after international sanctions, while the UAE has been taking more cargoes of Russian crude oil, according to ship-tracking data and sources.
There are other ongoing port expansion projects in the port set to be completed in 2024. The projects include a new dry bulk export terminal with an initial 18 million mt capacity, Etihad Rail connecting Fujairah with Abu Dhabi and Dubai, ADNOC's 42-million-barrel underground crude storage and Fujairah Oil Terminal's VLCC connection.
The Etihad rail connection will increase container traffic at AD Port Group's Fujairah Terminal, boosting bunker demand, while the opening of the Al-Zour refinery in Kuwait recently will increase bunker demand as higher supply of LSFO reduces the product's prices, one survey participant said.
Product from Kuwait is expected to be shipped to Fujairah refineries for blending, boosting bunker demand as more supplies are available for export. Kuwait's 615,000 b/d refinery started selling LSFO, jet fuel and naphtha earlier this year. The refinery will also increase demand for storage at Fujairah, analysts said. More products from Russia since its invasion of Ukraine in February 2022 helped boost Fujairah oil product inventories to a two-year high, according to data compiled by S&P Global.
