The investment is aimed at doubling Puma Energy’s storage capacity in Africa, Malaysia, the Caribbean and the Middle East to 25 million barrels over the next two years, Trafigura CFO Pierre Lorinet told the Reuters Energy Summit in Singapore.
“These investments allow us to open new markets and expand our trading operations by improving logistics in regions where adequate infrastructure is lacking,” Lorinet was quoted saying.
According to Reuters, Trafigura currently leases and owns storage capacity totalling 30 million barrels worldwide. Less than a third is in Asia.
The trading house is said to be already using about 20 million barrels of its global storage capacity.
“These investments allow us to open new markets and expand our trading operations”
Lorinet said contango strategies were not behind the move to increase storage capacity. The decision to invest “was made well before the contango appeared, and construction could be completed well after it evaporated,” he was quoted saying.
According to earlier reports, Trafigura is a client at Horizon Terminal on Jurong Island in Singapore.
The total storage capacity of Horizon Terminal now stands at 1.24 million m³. 60% of the total capacity is used for heavy fuel oil, or bunkers, and 40% is dedicated to clean petroleum products.
The terminal is made up of 59 bulk liquid storage tanks, with sizes ranging from 6,000-45,000 m³, and four marine jetties to berth vessels ranging from 2,000 dwt bunker tankers to 280,000 dwt VLCCs.
Trafigura had last July already indicated that it had no plans to scale down fuel oil trading in Asia.
“The mogas (motor gasoline) and fuel oil strategies are unlikely to change dramatically,” it said in a statement to Reuters then.
It also said that it would continue its bunkering services from floating storage vessel offshore Malaysia, although it added that it had plans to move its fuel oil operation to an onshore location.
“We can confirm that far from a reduction in our storage volumes in Asia, we are aiming to build our overall capacity,” it added.
The company has been reported to be one of the players interested in acquiring storage space at the Malaysian ‘bunker hub’ on Tanjung Bin Island near the port of the Port of Tanjung Pelepas (PTP). The hub is currently under construction.
Meanwhile, Trafigura is expecting profits from its oil storage facilites to boost its earnings to record levels this fiscal year.
The company said in March that its storage facilities should make it able to deliver profits at a time when prompt fuel markets were weak and expected to remain weak in coming months.
“Potentially we’re on track, barring any unforeseen changes, to have the best year ever this year,” Mike Scott, Trafigura’s Asia head of crude oil and crude derivatives, told a news briefing.