FEATURE: Fujairah eyes 4th refinery in 2021 as Oman plans to add storage
8th December 2020 14:01 GMT

Fujairah is expected to have its fourth refinery in 2021 as the UAE's Abu Dhabi National Oil Co. starts trading its flagship Murban crude as a futures product, potentially providing a boost to trading at the UAE's east coast port.

Brooge Energy Ltd. expects its 25,000 b/d refinery producing low sulfur fuel oil to be launched in the second half of 2021, CEO Nicolaas L. Paardenkooper said on a Nov. 30 conference call. The company is also expanding storage capacity with an additional eight tanks.

The port's third refinery was started in April 2020, a 15,000 b/d plant owned by Ecomar Energy Solutions. Its capacity has since been expanded to 20,000 b/d, with plans to hit 60,000 b/d by 2023.

"We see the future as looking pretty good," Ecomar Trading Director Leigh Shaddick said in an interview. "We are able to be nimbler than the big oil companies. The UAE has done a fantastic job managing COVID-19. The Port of Fujairah has done a great job. The infrastructure is there and there have been no delays in vessels coming in or leaving the port."

Fujairah will get new competition in 2021. Oman is planning a Ras Markaz crude oil park, with the first phase starting next year at total capacity of 25 million barrels of crude, according to the Oman Tank Terminal Co.

The Duqm refinery will build and use about 6 million barrels, according to Oman Tank. Until then, Oman Tank said it has a permit to launch floating storage, allowing customers to store more than 2 million barrels of Oman export blend crude oil. Fujairah has the capacity to store about 20 million barrels of crude and 40 million barrels of oil products.

Murban boost

Fujairah's exports and imports of goods were back to pre-pandemic levels by August or September, after tonnage volume plunged 25%-30% in April, the port's business development manager, Martijn Heijboer, told a Gulf Intelligence interview published online on Oct. 21. Volumes had hit a record high in February before the coronavirus crisis escalated, he said.

The entire Middle East will be in recovery mode for most of 2021, with Fujairah's prospects brightened somewhat by incremental trade of Murban crude delivered from Fujairah with the launching of ICE Futures Abu Dhabi, according to managing director, Middle East, for Facts Global Energy, in London, Iman Nasseri.

"With Fujairah port throughput already recovered, there may be some more business in 2021 in terms of port activity but not much," he said, adding that average trading of petroleum products in the Middle East will be about 7 million b/d in 2021, compared with about 6.5 million b/d in the third quarter of 2020 and well below the peak of about 7.5 million b/d in Q3 2019. It won't be until 2022 when average Middle East trading exceeds the 2019 peak, and reach about 8.5 million b/d by 2023 or 2024 as giant refineries in Saudi Arabia, Iraq, UAE and Oman start up, he said. "These 1 million plus b/d of additional products trade could potentially boost Fujairah business due to both incremental bunker demand as well as storage and trade activities," he said.

The port is looking to offer data on bunkering and other commodities, Heijboer said.

When asked about the areas where Fujairah could develop, traders and bunker suppliers were both unanimous on the need for bunker sales figures.

"A detailing of bunker sales volumes broken down by fuel type every month a la Singapore would help us all plan our inventories better, and manage our cargo exports in case of trading companies and refiners," a supplier based in Fujairah said.

In Singapore, preliminary bunker sales volumes are released by the Maritime and Port Authority around the 13th of every month, with sales figures for high sulfur and low sulfur fuel oil bunkers detailed by viscosity, along with sales of marine gasoils.

UAE traders are mixed on their outlooks for very low sulfur fuel oil in 2021. A recession is seen through Q2 and Q3, with recovery only in Q4 when marine fuel demand and margins may rise, a trader said.

Another said cargoes would remain constant in Q1-Q2, so bunker prices might rise but still wouldn't return to $800/mt for at least four years.

A third UAE VLSFO trader said demand might return to early 2019 levels if a vaccine were distributed widely after six months. "I am bullish by April things will start to improve and normalize on the trade side," the trader said.

Fujairah-delivered marine fuel with maximum 0.5% sulfur bunkers dropped almost 50% this year, while 0.5% Fujairah FOB for cargoes is down about 44% after climbing 87% last year. Platts began assessments for Fujairah-delivered bunkers in July 2019 while Fujairah FOB started in January 2019.

"We did see very healthy [marine fuel 0.5%] sales of an estimated 800,000 mt a month at the start of 2020, but that number fell to a low of approximately of 400,000-500,000 mt/month in Q2. Luckily the number has picked up again to 600,000-700,000 mt/month late in Q3," a trader based in Fujairah said.

 


Bunkerworld .,
8th December 2020 14:01 GMT