November 6, 2017 [Reuters] - Singapore port operator Jurong Port is entering the oil storage business to diversify its revenue as volumes passing through its cement and steel terminals fall amid a slowdown in the construction and shipbuilding sectors, its chief executive said.
The government-linked company operates a port for general, container and bulk cargoes, such as cement and steel, in the west of the city-state. Singapore is the world’s second-largest container port by throughput after Shanghai.
Jurong Port, with its steel and cement volumes falling 10-20 percent from a year ago as the construction industry shifts from loose cement and steel to prefabricated concrete, especially in the public housing sector, is transforming its business.
“We are transforming so we can intensify the operations, such that perhaps what used to take five berths will take 3 berths. So we can use the additional freed-up berths for other types of businesses,” said Chief Executive Ooi Boon Hoe.
“We are not sounding the death knell to traditional cargoes. We (just) … need to do more in other sectors.”
Jurong Port is building a 480,000 cubic metres oil storage terminal on 16 hectares (39.5 acres) of land on its site to store clean petroleum products to be ready in the last quarter of 2019.
The terminal’s connectivity to the petroleum and petrochemical network on Jurong Island – where oil major Exxon Mobil and others have refinery and petrochemical complexes – is another reason why Jurong Port is diving into oil storage, Ooi told Reuters in an interview.
Despite a backwardated market – where front-month oil prices higher than in forward months make the storing of oil products uneconomical and yield a glut in storage capacity – demand for tank capacity is expected to recover in two to three years, said Jurong Port Tank Terminals’ general manager Loh Wei.
Jurong Port is also banking on an increase in demand for marine gasoil ahead of International Maritime Organisation (IMO) fuel standards that start in 2020 and which will likely cause shipowners to use more low sulphur gasoil to power vessels instead of fuel oil.
Jurong Port – which holds 60 percent of the stake in the tank terminal, with independent oil storage operator Oiltanking taking the rest – will do the marketing for the project.
The port operator expects steel and cement volumes to stabilise next year and pick up in the second half of 2018 as construction activity at Singapore’s airport and in its private residential sector, which relies less on prefabricated concrete, boosts demand.
Jurong Port’s cement terminal can handle 7.5 million tonnes a year. Its steel terminal has a capacity of 6 million tonnes, according to the company website.
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