Sinopec's oil storage site will strategically allow to export to regions around the world with high demand for oil, such as the US. (Photo/Xinhua)
Sinopec, Asia's largest oil refiner, has started building Southeast Asia's largest oil storage terminal at the Batam free trade zone in Indonesia. This will be the company's first self-run overseas oil storage facility, the Chinese-language Economic Observer reports.
Liu Feng, an analyst at Zhuochung Information's energy branch, said Batam, which is situated along the Strait of Malacca near Singapore, is geographically important. The establishment of Sinopec's oil storage facility and refinery there could help the company save transport costs and allow its refined products to be sold to Southeast Asia, Northeast Asia and the Middle East, as well as other international markets.
The newspaper said Sinopec relied on imports for 70% of its crude oil needs, while Indonesia was one of Sinopec's major crude oil importing clients. If Sinopec set up a refinery in the country, this would help save a substantial amount of transport expenses.
Work for building an oil storage facility, capable of storing up to 2.6 million cubic meters of crude and refined fuels, commenced on Oct. 10. The first phase of the terminal project will include the construction of storage for up to 16 million barrels of crude and refined fuels. The construction of Southeast Asia's largest oil storage terminal is scheduled to be completed in two years.
The newspaper pointed out that Sinopec's affiliate Sinopec Kantons Holdings had already set up the PT West Point Terminal in Indonesia a year ago.
Sinopec Kantons Holdings acquired an 80% and 20% stake, respectively, in WP through PT Batam Sentralindo and PT Mas Capital Trust. The latter is a PBS affiliate.
WP was established in Indonesia in September 2011 to fulfill the company's development, construction, management and operational needs at the West Point Maritime Industrial Park, Batam Island, Indonesia.
The report said that in addition to the oil storage facility, Sinopec also planned on establishing an oil refiner with a capacity of tens of millions of tons and a petrochemical factory in Indonesia.
The Economic Observer said that earlier this year, Sinopec had signed a deal with Saudi Aramco to build a 5.2-million-square-meter oil refinery, which will process 400,000 barrels of heavy crude oil a day, in Yanbu.
Sinopec's first ever overseas oil refinery was scheduled to be operational in the second half of 2014, with Saudi Aramco possessing a 62.5% stake in the oil refinery and Sinopec holding the remaining stake.