The UAE’s Gulf Petrochem has announced the sale of 12% of its oil storage terminal project in Fujairah to the emirate’s government for an undisclosed sum, according to a company statement.
The 412,000 cubic metre storage project – which Gulf Petrochem initially costed at $136.4 million – is due for completion in September this year under a delayed schedule.
The announced cash injection follows the escalation of Iran’s military exercises in the Strait of Hormuz, a key maritime oil shipping lane that gulf producers can avoid via a land-based pipeline and an expansion of the current export terminal facilities at Fujairah.
Gulf producers are wary of Iran’s current posturing in the Strait – with hosts 35% of global maritime oil traffic – with a blockade likely to slash exports from Kuwait, Qatar, Iraq and the UAE, as well as Iran itself.
The investment is also a canny one, as oil traders seek to secure oil bunkering capacity in the Gulf which can bypass Iranian territory. The terminal is seeking to expand its overall bunkering capacity to 7 million cubic metres in the next three years.
While Gulf Petrochem decline to provide the amount Fujairah are investing, the cash is likely to ensure the completion of the strategically-significant project without further delay.
The latest company statement gave no project update, but as of September 2011 nine of the 17 planned storage tanks had been built.
