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Expecting Oil Trade Boom, Fujairah Oil Terminal Invests in VLCC Project

An oil tanker is being loaded at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia on May 21, 2018. REUTERS/Ahmed Jadallah/File Photo
An oil tanker is being loaded at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia on May 21, 2018. REUTERS/Ahmed Jadallah/File Photo
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Expecting Oil Trade Boom, Fujairah Oil Terminal Invests in VLCC Project

An oil tanker is being loaded at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia on May 21, 2018. REUTERS/Ahmed Jadallah/File Photo
An oil tanker is being loaded at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia on May 21, 2018. REUTERS/Ahmed Jadallah/File Photo

The Fujairah Oil Terminal is investing an estimated $45 million to upgrade the infrastructure at its storage facilities, betting on a surge in crude trading and storage demand at the United Arab Emirates oil hub, the company's chairman told Reuters.

FOT's expansion, financed by a new $280 million debt facility, will connect its terminal to the Port of Fujairah's very large crude carrier (VLCC) loading facility and the Abu Dhabi Crude Oil Pipeline (ADCOP) pipeline, said Steve Bickerton, senior managing director at Prostar Capital and chairman of FOT.

"That's a game changer because it gives us access to customers who want to be moving crude oil through VLCCs and it gives our customers direct access to the ADCOP, which brings Abu Dhabi's Murban Crude into Fujairah," said Bickerton.

The project is expected to be completed by the end of next year, Bickerton said.

Abu Dhabi in March launched the Murban crude futures contracts, a physically delivered contract with delivery at Fujairah, offering a rival pricing benchmark and allowing traders to hedge Middle East crude and refining margins.

UAE national oil company ADNOC also plans to boost its output capacity to 5 million barrels per day (bpd) by 2030 from about 4 million bpd now.

"Whilst the port has historically been one of the largest bunker fuel ports in the world, I think we're potentially going to see that being taken over and dwarfed by the crude oil market," said Bickerton.

With the trading and storage opportunities made possible by the Murban oil futures contract, Bickerton added it was "a real possibility" for Prostar to increase its Fujairah crude oil storage capacity through its wholly-owned GTI Fujairah terminal located alongside FOT.

Prostar Capital is a 40% shareholder in FOT with the rest held by Hong Kong-listed Sinopec Kantons (50%) and the Government of Fujairah (10%).

"GTI Fujairah has a large land-bank at the back of the existing terminal and it could build another 500,000 cubic meters of storage on that land and can access the same VLCC connection that we are putting in as part of FOT's program," said Bickerton.

FOT contributed 29% of the Port of Fujairah's 2020 throughput and represents about 12% of the Fujairah storage market, according to Prostar's website.

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ECB's Lagarde Renews Integration Call as Trade War Looms

FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
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ECB's Lagarde Renews Integration Call as Trade War Looms

FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo
FILE PHOTO: European Central Bank President Christine Lagarde and Governor of the Bank of Finland Olli Rehn arrive at the non-monetary policy meeting of the ECB's Governing Council in Inari, Finnish Lapland, Finland February 22, 2023. Lehtikuva/Tarmo Lehtosalo via REUTERS//File Photo

European Central Bank President Christine Lagarde renewed her call for economic integration across Europe on Friday, arguing that intensifying global trade tensions and a growing technology gap with the United States create fresh urgency for action.
US President-elect Donald Trump has promised to impose tariffs on most if not all imports and said Europe would pay a heavy price for having run a large trade surplus with the US for decades.
"The geopolitical environment has also become less favorable, with growing threats to free trade from all corners of the world," Lagarde said in a speech, without directly referring to Trump.
"The urgency to integrate our capital markets has risen."
While Europe has made some progress, EU members tend to water down most proposals to protect vested national interests to the detriment of the bloc as a whole, Reuters quoted Lagarde as saying.
But this is taking hundreds of billions if not trillions of euros out of the economy as households are holding 11.5 trillion euros in cash and deposits, and much of this is not making its way to the firms that need the funding.
"If EU households were to align their deposit-to-financial assets ratio with that of US households, a stock of up to 8 trillion euros could be redirected into long-term, market-based investments – or a flow of around 350 billion euros annually," Lagarde said.
When the cash actually enters the capital market, it often stays within national borders or leaves for the US in hope of better returns, Lagarde added.
Europe therefore needs to reduce the cost of investing in capital markets and must make the regulatory regime easier for cash to flow to places where it is needed the most.
A solution might be to create an EU-wide regulatory regime on top of the 27 national rules and certain issuers could then opt into this framework.
"To bypass the cumbersome process of regulatory harmonization, we could envisage a 28th regime for issuers of securities," Lagarde said. "They would benefit from a unified corporate and securities law, facilitating cross-border placement, holding and settlement."
Still, that would not solve the problem that few innovative companies set up shop in Europe, partly due to the lack of funding. So Europe must make it easier for investment to flow into venture capital and for banks to fund startups, she said.