Friday 29 Mar 2024
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KUALA LUMPUR: Pengerang Independent Terminals Sdn Bhd (PITSB), a joint venture (JV) vehicle between Dialog Group Bhd, the State Secretary of Johor (SSI) and Rotterdam-based Royal Vopak NV, has leased its storage tanks to BP plc and Total SA, according to a Reuters report yesterday.

“BP has leased more than half of the storage space from Vopak, while Total will use the remainder,” said Reuters, quoting industry sources, adding that the leases are likely for more than a year.

A top company official in Vopak told the news agency that Vopak, the world’s largest independent storage company, would start operations at the first commercial crude oil tank farm in Southeast Asia in March this year. However, it has been reported that MT Vinalise Glory was the first ship to dock at the terminal on April 12 last year. Dialog officials could not be reached for comment at the time of writing.

The protracted low oil prices will certainly bode well for those in the oil tankers business, for, as Reuters noted, in a contango market cheap oil can be bought and held in tanks to be sold at higher prices in the future. 

PITSB is the operator of the new independent storage terminal for oil products in Pengerang, Johor. The Pengerang region, located at the tip of Johor, is close to international shipping routes and the international oil hub in Singapore. The facility will provide storage, blending and distribution services for crude oil and clean oil products and will be capable of handling very large crude carriers with its water depth over 20m.

Dialog (fundamental score: 1.70; valuation score: 0.70) holds 41% of the JV vehicle while Vopak has a 49% stake. The SSI owns the remaining 10%.

Dialog executive chairman Tan Sri Dr Ngau Boon Keat told The Edge Financial Daily last June that the deepwater project is envisioned to resemble the deepwater terminal project in Rotterdam.

The first part of phase 1 contains 25 oil storage tanks, spearheading the ongoing construction of oil tankers on the 150 acres (60.7ha) of reclaimed land. It has a storage capacity of 432,000 cu m. The entire first phase will give a total storage of 1.3 million cu m. The project, which will be built in three phases in the next 15 years, would provide a total storage capacity of five million cu m.

Notably, Dialog and Vopak are currently equity partners in Kertih Terminals Sdn Bhd in Malaysia. This is a 395,900 cu m storage facility for chemical products and liquefied gas, located in Kertih, Terengganu.

Dialog shares closed 1.85% higher at RM1.65 yesterday, bringing a market capitalisation of RM8.18 billion. 

 

This article first appeared in The Edge Financial Daily, on February 5, 2015.

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