Sinopec is set to construct storage in Asia whilst buying space in Europe
Industry sources have said Asia's largest refiner will begin the first phase of construction on a 16 million barrel oil storage facility in the Batam Free Trade Zone in Indonesia. The work will take between 18 to 24 months to complete, with Indonesian officials earmarking at least 360 hectares (3.6m sqm) for the development, which will eventually include a refinery and a petrochemical project. Upon completion the new facility will be strategically placed to service Singapore, the region's top trading hub.
The project was originally planned as a joint venture between Sinopec and OilTanking, an entity privately held by Marquard & Bahls, but was suddenly dropped after OilTanking built a storage facility in Karimun instead. Sources say the Chinese major has been planning the project for a number of years and will go ahead alone.
Meanwhile Sinopec has also revealed plans to spend $167m for a 50% stake in European storage company, Vesta Terminals. In a joint venture with Swiss trading firm, Mercuria Energy, Sinopec Kantons Holdings will buy into 10m barrels-worth of storage situations in Estonia, Holland and Belgium.
While Sinopec will benefit from the first magor Chinese venture into European oil and petrochemical storage, Mercuria - one of the world's top five energy traders - stands to gain a foothold in the Chinese energy market.