Sinopec’s U.A.E. Oil Storage Venture Receives First Fuel

Fujairah Oil Terminal, a joint-venture storage facility in the United Arab Emirates, received its first cargo of light distillates and will get an initial crude delivery this month, Commercial Director Malek Azizeh said.

The start of operations makes the terminal the first storage facility in the Port of Fujairah with crude tanks available for lease, Azizeh said by phone Thursday. Abu Dhabi National Oil Co., the state producer from the U.A.E. capital, has a crude storage site in Fujairah for its own use.

Fujairah is nestled between the country’s Indian Ocean coast and the Hajar Mountains and lies outside the Strait of Hormuz at the mouth of the Persian Gulf. Abu Dhabi, holder of most of the U.A.E.’s oil, started a crude pipeline to Fujairah in 2012 to allow for exports to circumvent the Hormuz shipping chokepoint and reduce shipment times to Asia.

“Fujairah makes sense geographically because it gives access to markets and cuts the distance for shipments,” Chris Gunson, an Abu Dhabi-based energy lawyer at Pillsbury Winthrop Shaw Pittman LLP, said by phone on Thursday. “There’s more potential for growth as storage capacity gives traders more flexibility.”

A contango structure in oil prices has encouraged traders to store crude on the anticipation of selling material later at a higher price. Storage tanks can also blend different refined products to match fuel specifications for different markets.

The Fujairah Oil Terminal has capacity to store 1.18 million cubic meters of crude, fuel oil, gasoil, gasoline, according to its website. The venture is 50 percent owned by Sinopec Kantons Holdings Ltd., with the rest shared between Singapore-based Concorde Energy Group and Fujairah.

The facility completed loading the cargo of about 45,000 metric tons of a fuel component that can be blended with gasoline at about 9:30 p.m. Wednesday, Azizeh said. A vessel of that size supplies enough fuel to fill more than 50,000 cubic meters of storage, he said. Light distillates include transport fuel like gasoline, or naphtha, which can be used in chemical plants.