Special Report: Boost in the Middle East midstream operations

The stiffening competition in the oil trading market is prompting the players to expand their crude oil storage infrastructure and terminal networks, and invest in the development of storage facilities and new pipelines.

For terminal operators in the refining and petrochemical industries, efficiently maximising the throughput of the terminal is critical to remain as key suppliers to their customers. (Image courtesy: Vopak Horizon)
For terminal operators in the refining and petrochemical industries, efficiently maximising the throughput of the terminal is critical to remain as key suppliers to their customers. (Image courtesy: Vopak Horizon)

The stiffening competition in the oil trading market is prompting the players to expand their crude oil storage infrastructure and terminal networks, and invest in the development of storage facilities and new pipelines.

The global oil storage market is set to become more competitive due to burgeoning investments by some of the key market players, according to Transparency Market Research. Various industry players are undertaking strategic collaborations including joint ventures, acquisitions, mergers and partnerships in order to establish a stronger market position.

Industry trends

The market was valued at $12.86bn in 2016, and was expected to reach $17.22bn at a compound annual growth rate (CAGR) of 4.2% from 2017 to 2023. Fluctuations in global rates of natural gases and crude oil are prompting vendors to own high qualities of petroleum fuel and reserve them at storage facilities.

The storage can even be for a short span of time as the oil could be transported for refinement. Increase in oil production is another factor that has encouraged suppliers to improve their inventories and infrastructure to store large quantities of oil. The emergence of LNG-powered marine containers due to proliferation of LNG (liquefied natural gas) projects is expected to further expand the oil storage market.

Regularly evolving consciousness of environment hazards enforced by regulators globally has impacted the flow and storage of petroleum products – the most looked forward is the changing specification of fuel oil. The International Maritime Organisation is going ahead with a global sulphur cap of 0.5% on marine fuels starting from 1 January 2020. To achieve this specification, industry experts have shared that it would need more blending and increased storage resources.

The Middle East and Africa region holds a dominating position in the global oil storage market due to the contribution of Oman, the UAE, Iran, Saudi Arabia and Nigeria to the sector. This region was expected to post a CAGR of 7.91% between 2014 and 2024.

Trends in the Middle East

In January 2018, Australia’s Prostar Capital purchased a storage terminal in the UAE – Socar Aurora Fujairah Terminal. The terminal is made up of 14 operational storage tanks with a total capacity of 352,000M3. Another 12 tanks are being built. Prostar already owns a 40% stake in the Fujairah Oil Terminal.

Nogaholding and Schmidt Heilbronn inaugurated its new joint venture facility, Schmidt Logistics Bahrain, in November 2017. The $20mn facility will create around 100 jobs in the logistics sector. Located in the Bahrain Logistics Zone, it will support the zone’s expanding operations, particularly in the chemical and petrochemical logistics market.

In September 2017, CB&I announced that its consortium with Saipem had been awarded a contract by Duqm Refinery and Petrochemicals Industries Company for EPC Package 3 for the Duqm refinery project.The consortium’s scope of work for Package 3 encompasses the engineering, procurement and construction (EPC) of a product export terminal at Duqm Port, a crude tank farm at Ras Markaz and an 80KM crude oil pipeline.

CB&I announced in August 2017 that it had been awarded a contract by Tecnicas Reunidas for new product storage tanks that will be part of a clean fuels expansion project at Saudi Aramco’s refinery in Ras Tanura, Saudi Arabia.

In another interesting development, in June 2017, Alizz Islamic Bank funded construction of Orpic’s petcoke storage facility at the company’s Sohar refinery complex.

ENOC Group signed a pact with Rotary Engineering in April 2017 to build 12 storage tanks as part of its plans to expand the capacity of its Jebel Ali refinery by 50%. The tanks will also be integrated into the port’s logistics systems and connected to the marine export facilities on the terminal jetties to ensure faster transportation of stored petroleum products.

In February 2017, Schmidt Middle East Logistics launched operations of its multi-user logistics hub based in Khalifa Port Free Trade Zone (KPFTZ), within Khalifa Industrial Zone Abu Dhabi (KIZAD), UAE.

Schmidt Middle East Logistics had leased about 22,000M2 of prime land at KPFTZ in order to set up an economical and efficient solution to store, handle and distribute different bulk materials ike polyethylene, polypropylene, catalysts and additives for  the chemical and petrochemical industry.

Bahrain LNG announced in January 2017 the plans to start work on a giant terminal. Bahrain LNG, developer and owner of the kingdom’s first receiving and regasification terminal for liquefied natural gas, started the construction work on its new terminal in January  2017, and completion is scheduled for 2019.

Overseas logistics investments

October 2017 witnessed Aramco Overseas Company (AOC), buying stake in Rotterdam terminal from Gunvor. AOC entered into an arrangement to buy Gunvor Group’s stake in the Maasvlakte Olie Terminal (MOT) in Rotterdam, the Netherlands. The divestment of MOT is part of Gunvor’s strategy to further develop its Rotterdam refining operations.

AOC’s investment in MOT will add to its current participation in other facilities in the same area, allowing for expanded offerings in the North West Europe refining hub. This will complement Saudi Aramco’s export activities in Europe, strengthen the company’s supply chain and enhance its customer services in the region. In yet another interesting development, Dubai-based ATS started storage tank terminal operations in India in June 2017 at the strategic and emerging oil storage and trading location of New Mangalore Port.

Technology developments

In December 2017, Oceaneering International announced that its TerminalSmart platform had been improved to efficiently manage liquid terminal product movements across an entire terminal, while supporting a range of functions. The TerminalSmart platform is a hub for terminal logistics ranging from facilitating key performance indicators to warning users about scheduling conflicts.

In another development, Emerson Automation Solutions unveiled a new terminal management software in April 2017. As for terminal operators in the oil and gas, chemical and refining industries, efficiently maximising the throughput of the terminal is critical to remain as key suppliers to their customers, Emerson released TerminalManager, the next-generation software for managing all terminal operational and commercial activity.

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