October 21, 2015 [Reuters] - Independent oil storage operator Oiltanking expects its new facility in Karimun, Indonesia to start-up at the beginning of next year, a senior company official said.
The terminal will start operating on Jan. 1, with construction almost complete, said Sjoerd Boer, vice president in Oiltanking Asia-Pacific’s commercial division. The company had hoped to start the site in the current quarter of 2015 after it was delayed from the last quarter.
“January was always our target date. We wanted to get it running earlier, but it’s not unusual for a project of this size,” he said.
Around 60-70 percent of the storage space has either been leased or contracts are about to be signed, Boer said, declining to specify which companies have indicated interest.
The interest has been for both clean and dirty products, he added.
A substantial portion of the space will be leased by commodities trader Gunvor – a minority stakeholder in the project – though Boer declined to say how much.
Oiltanking Karimun, located about 25 nautical miles from Asia’s main oil trading hub in Singapore, is a 760,000 cubic metres terminal and the company’s second biggest storage project in Asia in terms of capacity.
Half of the tanks will be set aside for heavy products such as fuel oil, with the rest holding clean oil products.
Oiltanking has a more than 60 percent stake in the $270 million Karimun storage facility, with Gunvor and an Indonesian firm holding the rest.
The Karimun terminal is designed to service the Singapore trading and shipping hub and tap growing oil demand in Asia.
With Singapore unable to commit more land to commercial storage to serve trading companies, Indonesia and Malaysia have stepped up their own investments into oil and chemicals storage infrastructure.
Interest for tank space has been picking up as an oil products supply glut amid expanded refining capacity is making storage economics profitable, industry sources said.
Malaysia’s Pengerang Independent Terminals has fully leased out its 1.3 million cubic metres (cbm) of storage space for crude oil and oil products, while the second phase of VTTI’s storage unit at Tanjung Bin oil terminal in southern Malaysia has been fully leased to store fuel oil.
