Shell, Vitol boost UAE storage to handle Iraqi crude
Royal Dutch Shell and trading house Vitol are stepping up their operations in the port of Fujairah to store Iraqi crude as production from the OPEC member rises, industry sources said.
Iraq is OPEC’s second largest producer after Saudi Arabia and its output has almost doubled since the start of the decade at 4.7 million barrels per day (bpd). With a target of 5.5-6 million bpd by 2020, Iraq wants to be exempt from the cartel’s bid to boost oil prices with production cuts to reduce a global surplus.
Located on the east coast of the United Arab Emirates at the entrance to the Strait of Hormuz, Fujairah is one of two major ports in the region along with Oman’s Sohar and is a busy refuelling point for tankers taking crude on long voyages out of the Gulf.
The emirate is keen to boost its status as a global trading hub by increasing its port storage capacity from 10 million cubic metres to 14 million cubic meters by 2020. Traditionally, it focused on fuel to power tankers and refined oil products.
Shell leased five large crude storage tanks at the port last year to take advantage of low oil prices for the play, industry and trading sources said. Shell is an equity partner in Iraq’s Majnoon oilfield.
“The storage tanks were built specifically according to Shell’s requirements,” a trading source in Fujairah said. “Shell wanted to avoid any fluctuations in production out of Iraq. So far they are the only ones who have a contract with (storage company) Vopak to bring crude using the new jetty,” another trading source said. — Reuters