The terminal may come with an adjacent piece of land, allowing the potential buyer to expand and tap on rising quantities of crude oil and oil products passing through the Malacca Straits to meet growing demand in Asia.

Singapore, Asia’s largest oil trading hub, faces land shortages that have driven billions of dollars of spending on the construction of storage facilities in neighbouring Malaysia and Indonesia.

With oil pricing agency Platts – whose oil benchmarks are used by majority of contracts in Asia – proposing to include ports in Malaysia and possibly Indonesia as cargo loading points, more investments are expected to take place in these countries, traders said.

Tanjung Langsat Port (TLP) is negotiating with at least five companies to sell its wholly owned 100,000 cubic metres storage tank terminal, the sources close to the matter said.

At least two Singapore companies, including a small trading firm and a small oil tanking facility, are involved in the talks, one of the sources said, declining to reveal more details citing non-disclosure agreements.

TLP is also considering selling an adjacent piece of land of about 15 hectares next to the terminal as the firms involved in the talks have requested for it, a second source said.

“It’s at the second stage of discussions now and (TLP) still has to do a due diligence survey of the companies involved which could take about three weeks,” the source added.

Tanjung Langsat Port, a wholly owned subsidiary of state-owned Johor Corporation, started operations at the storage tank terminal in June 2008, but stopped later that year due to a fire at one of its tanks, according to the company website.

While the tanks have been fully restored, they have been left empty since then, the sources said. They are able to store mainly clean oil products like gasoline, naphtha and diesel, one of the sources said.

It was not immediately clear on why the storage terminal was put up for sale. Tanjung Langsat Port was set up as one of the areas to be further developed in line with the government’s aim of transforming southern Johor as a hub for oil and gas, according to the company website.

There is also another 670,000 cubic metres of oil storage in Tanjung Langsat, which is mainly invested by Malaysia’s Dialog Group, MISC and Puma Energy, partly owned by Trafigura.

Tanjung Langsat Port’s liquid jetty has a water depth of 15 metres and can cater to vessels ranging from 5,000 to 120,000 dwt.