Saudi oil trader Bakri to expand storage, fleet

By Yaw Yan Chong and Neil Chatterjee

SINGAPORE (Reuters) - Saudi Arabian oil trader Bakri will more than double its Middle East storage capacity and is looking for tank space in Singapore as it seeks to profit from growing shipping demand and limited new fuel oil supplies.

The independent firm, which trades and supplies mainly fuel oil, will lift its storage from 300,000 cubic meters in Fujairah, along with a host of similar projects in the United Arab Emirates port, said Rifaat El Gohary, managing director of Bakri Trading Co. (Asia).

It is also expanding its fleet of 70 marine units, with 12 new bunker barges expected by end-2008, he said in an interview on Wednesday as part of the Reuters Energy Summit.

"For small-to-medium trading companies like us, it's about what we can bring to the table. The only way to enhance our presence is to get involved with oil-related infrastructure," he added.

Other major players in the Middle East such as FAL Oil and new entrant Chemoil (CHEL.SI: Quote, Profile, Research, Stock Buzz) are building storage terminals, mainly for fuel oil to tap growth in Fujairah, the world's second-largest bunkering port with reported 2006 volume of 11-12 million tonnes.

Bakri, started as a family-owned bunker-supply firm in 1973, is looking to lease similar facilities in Singapore, where 30-35 percent of its 2006 global volume of 9 million tonnes traded. In contrast, the world's third-largest independent trader, Trafigura, handles 95.5 million tonnes annually (1.7 million barrels per day).

The firm is involved in two oil storage terminal projects with total capacity of up to 950,000 cu m in the Middle East. The first, with total capacity of 550,000 cu m in two phases, is being built on its land in the Red Sea port of Yanbu.

Phase 1, which is wholly owned, will see the construction of a 150,000 cu m fuel oil storage facility by August-September. Phase 2, which is still under negotiations with a partner, is a 400,000 cu m terminal for gasoline blending and would be completed a year after a Letter of Intent is signed.

The firm also has a 25 percent stake in a 400,000 cu m terminal project in Fujairah with three other partners including Middle East traders Akron and Fairdeal.

It is considering a third project, looking at a one-third stake in a 900,000 cu m terminal with two partners.

All the terminal projects are mainly for fuel oil, used as marine fuel and for power generation, because incremental supply in the Middle East is not expected to meet growing demand.

MIDDLE EAST FUEL OIL GROWTH

"I am positive on fuel oil cracks because supply in the Middle East is getting less. There are some new refineries coming up in the region but they are not going to produce a lot of fuel oil," Gohary said.

But he said the uncertain timing of buying from the world's top importer China made demand difficult to forecast. "China is playing the game like a trader... the market is more volatile."

Bakri is also expanding its fleet with 12 new bunker barges of 7,000-tonne each, being built in China. It has taken delivery of two and expects the rest within 14-18 months.  Continued...