Revenues for oil producers have plunged as crude futures have crashed 70 percent since mid-2014 but oil traders are still looking for sites to store crude and fuels before selling on to customers. Additionally, oil refiners are maximising runs to produce gasoline and other fuels profitably on lower feedstock costs, adding to storage needs.

Gulf Petrochem, which mainly trades refined products and also has refining capacity, sees opportunities for its Fujairah facilities on the east coast of the United Arab Emirates (UAE) close to Iran, the company’s group director S. Thangapandian told Reuters.

Iran’s return to global oil markets after international sanctions were lifted in January was a “good thing,” he said in an interview on Jan. 27.

“With lifting of sanctions, we can expect better (Iranian) refinery throughput, better quality of product, and then more competition in the region,” he said.

Thangapandian sees a need for increased storage in the Gulf to provide facilities for traders and refiners to store and blend their products to meet the specifications of the final end-users.

“I see it as a positive thing because for a (Iranian) refinery that’s increasing its output, traders and tankages are very important because the quality of product required by customers and quality of product manufactured by the refinery usually don’t match,” he added, requiring independent storage and blending between buyers and sellers.

To address this shortage, Gulf Petrochem is investing $50 million into new storage capacity at its Fujairah terminal, expanding by 59 percent to about 655,000 cubic meters (cm). This will raise Gulf’s total global storage capacity to over 1.1 million cm, including its terminals in the Hamriyah Free Zone in the UAE and Pipavav, India.

The Fujairah expansion will also fill the general storage shortage in the region, especially as Chinese and Indian refined product consumption grows, said Thangapandian. This explains in part why tankers were being used for floating storage as market conditions emerged that made it attractive to store oil or refined products for sale later, such as next year.

“As we speak, we are holding almost 100,000 tonnes (about 670,000 barrels) of product in hired tanks because our terminals are full.” he said.

Beyond storage demand, Thangapandian said it was also a good time to invest because steel prices are at multi-year lows and contractors are offering competitive rates as a result of limited regional investments.

Thangapandian said that the tender for the engineering, procurement and construction at Fujairah should be issued in early February, with completion aimed at March 2017.