HYDROCARBON
ENGINEERING
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3.5 million bbls of crude and 4.7 million bbls of oil products. The
other owners of Oilhub Korea Yeosu Co Ltd (OKYC) are
Singapore’s China Aviation Oil (CAO), and Korea’s SK Energy
Co Ltd, GS Caltex Corp, Samsung C&T Corp, LG International Corp
and Seoul Line Corp.
Planners have started work on a third terminal in Ulsan by
2020 to store 18.5 million bbls of crude.
Traders want bigger Southeast
Asia oil storage role
Constrained by Singapore’s overstretched infrastructure, Asia’s oil
traders are pushing for a bigger storage and pricing role for
neighbouring Malaysia and Indonesia. In separate reports last year,
the IEA and Platts said tiny Singapore faces a limit to its growth as
it struggles to expand oil storage infrastructure on the island’s
roughly 750 km
2
area. Since the late 1980s, Platts’ team of
journalists in Singapore has been reporting deals and setting
prices for a variety of crude grades and oil products. In the early
1990s, Platts introduced a real time service that became so
successful that it has become the main reference for oil price
discovery in Asia.
To prevent fictitious deals from being reported to influence
prices, Platts demands that traders show proof of lease of storage
tank space in Singapore so that trades can be verified. Imposed in
the 1990s, this key condition has strengthened the independent
oil storage industry and Singapore’s trading hub status with Platts
recognised as an impartial source of price discovery and
reference.
The IEA expects developing Asia to import an additional
3.6 million bpd over the next five years to 2019, but it does not
see Singapore benefitting much from this new demand surge on
account of land constraint and rising business costs.
Having already expanded its oil storage capacity to
73 million bbls, Singapore appears to favour using its remaining
land for 'high value assets such as petrochemical facilities',
according to the IEA. Traders have responded by investing in
neighbouring Malaysia and Indonesia, boosting the two countries’
combined storage capacity to 50 million bbls.
Indonesia is planning to build and expand storage projects
around its islands near Singapore although implementation has
not been as smooth sailing as in Malaysia. In 2012, China’s Sinopec
Kantons Holdings announced that its 95% owned PT West Point
Terminal had started constructing a terminal on Batam Island to
store as much as 16 million bbls of crude and products. There has
been no update on the project which had been scheduled to
start up in late 2014. Germany’s Oiltanking and Switzerland’s
Gunvor Group expect to start up their jointly owned terminal on
nearby Karimun Island in the third quarter of 2015 with an initial
760 000 m
3
capacity. "While Singapore’s storage capacity has
been growing steadily over the last decade, further growth is
hampered by the scarcity of waterfront and lack of land available
for new expansions," said Gunvor.
Last December, Indonesia’s newly elected government under
President Joko Widodo enlisted foreign firms to help state owned
Pertamina expand and upgrade its refining and oil storage
facilities. Pertamina signed separate agreements with Saudi
Aramco, China’s Sinopec and Japan’s JX Nippon Oil & Energy
worth a total of US$25 billion as part of Indonesia’s plan to
reform its inefficient energy sector. The government has set a
target to expand the country’s fuel storage capacity by 40% to
9.4 million bbls over the next five years.
To facilitate the growth of Southeast Asia’s oil trade, Platts
announced last August that it will expand its FOB Singapore price
assessments for oil products to include the Indonesian terminals
from July 1 2015. The assessment, which has included Malaysia’s
Johor ports since 2001, will be renamed FOB Straits. Platts
indicated that 'the limited possibility of further expansion of
Singapore’s on land oil storage, coupled with growth plans in
nearby Johor and the Riau Islands, means trading of products, and
the benchmarks that reflect that activity, will spill beyond
Singapore’s traditional boundaries and into new frontiers'.
To counter industry concerns about land constraints,
Singapore launched the first phase of an underground storage
project on Jurong Island last September. The US$700 million
project comprises five rock caverns with a 9.2 million bbl storage
capacity. State landlord JTC Corp said it has leased out two
caverns with a total capacity of 3 million bbls to Jurong Aromatics
Corporation, and expects to complete the other three caverns
next year.
Malaysia
Apart from refineries and petrochemical plants, Johor state is
attracting investors to expand storage bases in Tanjung Bin and
Tanjung Langsat while Dutch oil and logistics firm Royal Vopak
and two Malaysian firms, state owned Petronas and listed
Dialog Group have agreed to jointly develop an oil storage
terminal at the new Pengerang Integrated Complex (PIC). To be
developed on a 63.5 hectare plot next to an existing terminal, the
PIC terminal will store as much as 2.1 million m
3
of crude, products
and petrochemicals. It is linked to serve the Petronas led oil
refinery/petrochemical complex due for startup in 2019. The
terminal will include a 24 m deepwater jetty facility to handle
very large crude carriers as well as berths for Q-Max sized LNG
vessels.
Vopak, which owns a 25% stake in the project, has described
it as a logistical centre linked by pipelines to support feedstock
and product flows among the petrochemical facilities and port
facilities within the Pengerang industrial complex. “The location
along one of the world’s busiest shipping lanes and its proximity
to international trading hub Singapore makes this terminal very
well positioned to service Southeast Asia,” said Vopak Chairman
and CEO Eelco Hoekstra.
Petronas, Vopak and Dialog also jointly own the Kertih
Terminals in Trengganu state while Dialog and Vopak along with
Johor state agency SSI are partners in the recently commissioned
Pengerang Independent Terminals Sdn Bhd (PITSB) in Johor. When
completed, PITSB will own and operate tanks to store
1.3 million m
3
of crude and products.
In an interview, Patrick van der Voort, Vopak’s Asia President,
said he is pleased with the project’s progress and the support his
company is receiving from its Malaysian partners and the
government. “It has gone to plan. We’re located next to one of
the world’s oldest and most important shipping lanes alongside
the South China Sea that link East Asia to the other regions. We
have a 24 m deep water draft and 420 m of channel for vessels to
navigate,” he said. “We operate the region’s first independent
crude storage terminal and we have plenty of room to grow.
There’s no congestion as we face the South China Sea.”
