Page 5 - DMEA Week 37 2021

DMEA COMMENTARY DMEA

IMO-compliant, very low sulphur fuel oil. struck, Paardenkooper disclosed that the funds
Under the terms of the contract, Blue Ocean raised would be used to expand further, both
Energy will finance and build the refinery with locally and globally, with greenfield projects the
Brooge taking control of operations and earning preference.
revenues from tolling fees on a take-or-pay basis. The company could also look internationally
The two companies agreed to a 20-year toll- at moving into gas storage, he said.
ing contract comprising a five-year deal which Fujairah’s growth thus far has been based
begins on completion of the unit’s construc- primarily on oil products. However, like Brooge,
tion phase, with three further five-year renewal companies based at the hub are increasingly
periods. positioning themselves to take advantage of the
At the time, Brooge CEO Nicolaas Paarden- worldwide increase in crude storage and trad-
kooper said: “The modular refinery will be ing activity during years of global oil market
focused on producing VLSFO and will be fully volatility.
compliant with the new IMO 2020 very low In common with Duqm on Oman’s east-cen-
sulphur rule. With the UAE adding to its oil tral coast the eastern emirate’s key selling point
production capacity, which we anticipate will is a strategic location outside the crowded and
drive demand for refining services for both the politically-sensitive Strait of Hormuz. This
domestic and export market, we believe this is advantage has been repeatedly highlighted by
an opportune time to enter this segment of the threats from Tehran to close the crucial water-
oil industry.” way in retaliation for US sanctions on Iranian oil
exports.
Leveraging location A 1.5mn-bpd pipeline carries crude oil from
Brooge’s ambitious drive towards 22mn barrels Abu Dhabi’s giant onshore oilfields to Fujairah
of storage capacity comes in the wake of the com- for export, and South Korea’s SK Engineering
pany’s entry to the US NASDAQ stock exchange & Construction has been working since 2019
in 2019 and its fortunes have followed the same to develop three, 14-mn-barrel underground
trajectory as Fujairah. crude storage caverns for Abu Dhabi National
Despite being federated with crude-produc- Oil Co. (ADNOC) in the emirate with comple-
ing giant Abu Dhabi, Fujairah produces no oil tion expected next year.
but has become a leading global trading, bunker- According to Martijn Heijboer, business
ing and storage hub over the past decade, com- development manager at the Port of Fujairah, oil
peting with the likes of Rotterdam and Singapore storage capacity will grow to 12mn cubic metres
as the third largest bunkering terminal. (7.5mn barrels) by 2024 amid work by ADNOC
BPGIC was created to profit from such and others to increase their capabilities.
growth, completing a 400,000 cubic metre, Speaking to S&P Global Platts, capacity will
14-tank storage facility for middle distillates and reach around 11mn cubic metres (6.9mn bar-
fuel oil in late 2017 with the recent expansion rels) by the end of this year.
designed to enable the loading and unloading of Major existing storage providers at Fujairah
very large crude carriers (VLCCs). include the Dutch/Dubaian Vopak Hori-
The firm’s international fund-raising inten- zon, Vitol subsidiary VTTI and the local Gulf
tions became evident in 2018 through the Petrochem.
engagement of HSBC and First Abu Dhabi Bank While storage capacity has been ramping up,
to advise on a proposed initial public offering refining capabilities are beginning to follow suit
(IPO) on the London Stock Exchange. with Ecomar launching and then expanding a
However, the following year, the fruits of an 15,000-bpd unit last year (to 20,000 bpd) to join
alternative financing strategy emerged, as the 67,000 bpd and 80,000 bpd units operated by
company announced a ‘reverse merger’ with Uniper and Vitol, respectively.
NASDAQ-listed ‘blank cheque’ company Twelve Concerns have been voiced about the addi-
Seas Investment Co. Such vehicles raise funds tion of significant new refining capacity but
from public investors in order to undertake an with Brooge contracting its new capacity before
unspecified merger or acquisition. launching it, there appear to be no such worries
In an interview shortly after the deal was in relation to crude storage.™

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