United Arab Emirates-based trader Gulf Petrochem has agreed to sell a 12 percent stake in its planned oil storage terminal to the government of Fujairah, the company said on Tuesday. Gulf Petrochem Group has been building a 412,000 cubic metre oil storage terminal in Fujairah, one of the emirates in the UAE and a major ship refuelling hub, for $136.4 million.

Under the agreement, Fujairah Petroleum Company (FPC), a subsidiary of Fujairah government, will also invest in the project, Sanjeev Sisaudia, the group’s chief executive said, but did not give the government’s exact investment amount.

The project is due be completed in September 2012, with a five months of a delay from the original schedule.

International oil traders and companies have been rushing to secure storage space at the port, which is strategically located outside the Strait of Hormuz, where the tensions between Iran and the United States have increased.

The port, the leading bunkering hub after Singapore and Rotterdam, plans to more than double its oil storage capacity to 7 million cubic meters in the next two to three years.

Gulf Petrochem said in September that it had already completed nine of the total planned 17 tanks. On Wednesday, chief executive Sisaudia reiterated that the company’s trading division was set to lease one third of the total tank capacity.

“The discussions (with potential leasees) are in advanced stages,” he said, but did not provide the company names.