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Tuesday, June 09, 2009

Japan's Itochu takes up fuel storage in Mid East

Tuesday, 09 June 2009

Japan's has leased fuel storage at Saudi Arabia's Red Sea port of Yanbu, the first onshore storage deal for the trader in the region, industry sources said on Monday. The firm, the international trading arm of Itochu Corp has signed a lease on 100,000 cubic metres of storage for refined oil products, sources said.
The Tokyo based Itochu Corp declined to comment.
The lease, which started on June 1, is expected to run for six months with an option for extension, sources said.
"They have been looking around for tanks for quite sometime now, but the situation here in the UAE is tough...land storage is tight," a Middle East based trading source said.
"I'm not surprised they jumped at the opportunity to take up those tanks which Morgan Stanley gave up."
U.S bank Morgan Stanley, which had previously held the tanks, did not renew its contract after it expired at the end of April, sources said.
Earlier this year, Itochu signed a contract to supply about 3 million barrels of gas oil to Saudi Aramco from March through December into the Red Sea region, where it is short of diesel.
"This is a good move for them...makes total sense because they could end up using these tanks to store what they are contracted to supply Saudi," a trader said.
"They will also likely use the tanks to look at opportunities to do some business into East Africa, just makes sense."
Supply of gas oil moving into the storage terminal at Yanbu is arriving from the Mediterranean and Caspian, shipping sources said.
The Yanbu terminal is currently operated by Horizon Terminals Ltd, a wholly owned unit of Emirates National Oil Co (ENOC).
The terminal houses bonded oil storage which allows companies leasing tanks at the facility to store oil strictly for exports, and not for domestic sales into the kingdom.
Kuwait's IPG holds the remaining 154,000 cubic metres of refined fuels storage at the terminal.
Source: Reuters