Sohar Port has signed a $600mn oil storage contract with Singapore-based Trescorp. The new facility will have six deep-water berths, with 25 metre drafts, one of them capable of receiving very large crude carriers (VLCCs) of up to 320,000 deadweight tonnage (dwt) — the so-called supertankers.
The new terminal will occupy space in Sohar Port South, a recently announced land reclamation project designed to create more space for industry at the fast growing Omani hub. In its first phase, the terminal will be equipped to receive, store and blend crude oil, fuel oil and diesel. Expansion plans for phase two include gasoline blending, jet fuel, asphalt and a lube oil blending plant.
Trescorp selected the location in Sohar for its excellent deep-water access. The strategic location of Sohar Port, outside the Strait of Hormuz but close to the Gulf States and the Indian subcontinent was also a key factor in the final decision. Furthermore Trescorp, like many overseas investors looking at the region, saw the long-term stability and neutrality of Oman as the safest haven for foreign direct investment in the Middle East.
Construction of phase-one will commence next year, with an initial storage capacity of 600,000 cubic metres, while future expansion plans will take the total storage capacity up to 1.8 million cubic metres. Construction of the facilities will be privately funded with initial investments for phase one estimated at $187 million. Operations are set to commence by 2020. As well as planned bunker services from Trescorp, Sohar Port is currently in advanced licensing negotiations with two other bunker service providers following a recent call for tender.
“The forecasts for the growth of petroleum trading in the Gulf area are far greater than the available storage capacity, which is still relatively small compared to combined storage at Port of Singapore and Johor Port that totals around 20 million cubic metres. Our world-class, dedicated marine facilities at the new terminal will ensure shorter turnaround times for vessels and faster re-exports, greatly benefitting our trading partners,” said Hamood Al Hashmi, Chairman of Trescorp.
“Our blending capabilities will also increase the value of products stored in the terminal. Refined products from Sohar will be traded and exported around the world to meet projected demand growth in the emerging economies of the Indian subcontinent, East Africa, China and the rest of Asia,” he added.
Five hectares of the new Trescorp development are allocated for the development of a Lubrication Park that will blend various grades of lubricating oil products, including marine grade lubricants. Supply of the products will include bulk delivery using lube barges to tankers bunkering in Sohar Port. Road tanker access to the new facility is also planned.
“The availability of new land in the Port thanks to our reclamation works make the crude and fuel terminal technically feasible. The commercial viability is to leverage existing petroleum trading infrastructures in Dubai, potentially adding offshore floating storage facilities in our new anchorage area,” said Mark Geilenkirchen, Sohar CEO
“There is enormous potential for the growth of oil trading and storage activities in the Gulf and we are delighted to be able to work with Trescorp to add a new level of service to our world-class facilities here in Sohar,” he added.