You are not going to believe thisJuly 1, 2015 9:22
Reuters Summit-Chemoil to complete Fujairah expansion by Q3 2012
Chemoil bunker sales to rise to 23-24 mln T in 2011; Started biodiesel and ethanol business in Q1; Talking with 2 potential partners for China J/V
June 13, 2011 3:45 by p.deleon
Global marine fuel supplier Chemoil Energy Ltd. expects to complete the seven-fold expansion of its Fujairah storage terminal by the third quarter of next year, the company’s chief executive said on Monday.
Chemoil is joining a host of energy firms – from refiners to trading houses to shipping lines – expanding capacity to feed rising demand, especially from emerging nations such as China. Oil prices have approached 2-1/2 year highs in recent weeks in part due to rising demand from China and India.
The joint venture storage terminal with Gulf Petrol Supplies LLC at the United Arab Emirates port of Fujairah will grow to 675,000 cubic meters from 90,000 cubic meters, Thomas Reilly said at the Reuters Global Energy and Climate Summit.
“It is a large project and it is on target,” Reilly said in an interview at his office in the city state.
The expansion is expected to cost around $130 million, and will be linked up to the upcoming Abu Dhabi Crude Oil pipeline, the company said last year. The terminal could be used for both crude and oil products and will depend on the final make up of its customers, Reilly said.
“We are in discussions with some players now and we expect some will sign up this year, and some in Q1 next year,” he said.
Chemoil is targeting to increase global fuel oil and bunker sales volume in 2011 to 23-24 million tonnes from 15.6 million tonnes last year.
Around 8 million tonnes of that will come from bunker trader and broker OceanConnect Marine (OCM), a subsidiary of Chemoil that was acquired at the start of the year, Reilly said.
“Global growth has not been great, but it’s been steady,” he said.
Reilly was appointed CEO of Chemoil following its acquisition of OCM. He was previously the chief executive of OCM’s parent company OceanConnect Holdings.
Chemoil started offering marine fuel hedging services to its shipping customers in the third quarter of last year and will set up a dedicated 3-man team in London by September. This will rise to 10 staff in a year’s time, Reilly said.
Chemoil is looking to enter China’s bunker market and is in talks with two potential partners from the country, Reilly said.
“It is a strategic market, we will never walk away from China,” Reilly said. “But you have to be realistic, some parties don’t bring so much to the table. When you put these joint-ventures together you want to make sure everyone is pulling on the same end of the rope.”
Chemoil is a major supplier of marine fuels in Asia and the U.S. West Coast and has a 482,000 cu m storage terminal in Singapore.
Glencore, the world’s largest independent commodities trader, took a controlling stake in Chemoil in December 2009. Japanese trader Itochu Group holds a 37.5 per cent, with the remaining 11.5 per cent in public hands.
Chemoil reported a first quarter net profit of $23.2 million, reversing a net loss of $13.5 million a year ago in the same period last year.
The Singapore-listed company has also expanded into the business of supplying biodiesel and ethanol to end-users such as refiners, and expects the renewables segment to be a major revenue contributor in two to three years, Reilly said.
Chemoil set up a five-man renewable energy team based in the U.S. in the first quarter and expects this to grow to 10 by year-end. It is looking to hire more staff to be based in Asia in about a month’s time.
“We are looking to expand opportunistically into the renewables sector. It is already quite profitable right now although it makes up a small part of our business. I see it developing into a major business,” he said.
The move is in part a response to global regulations that require cleaner burning fuel to be used in cars, ships and power stations.
“We are aligning ourselves for low-sulphur markets. No one has a clear crystal ball, but (the regulations) are real and they are going to be enforced,” he said.
The company is also looking to grow its marine gas oil business, he added, without giving details.
The UN shipping agency, International Maritime Organization (IMO), has set a 2020 deadline for the maritime community to slash the amount of sulphur burned by the global fleet.
By Francis Kan
(Reporting by Francis Kan, editing by Manash Goswami) Follow Reuters Summits on Twitter @Reuters_Summits