Horizon will invest $300m in expansion

Storage operator Horizon Terminals is investing nearly $300 million (Dh1.1 billion) to expand its terminal in South Korea next month and to build a new facility in Morocco by early 2009, its chairman said yesterday.

The Horizon Terminals group, wholly owned by Emirates National Oil Company (Enoc), has already pumped $350m into its Singapore facility – which will open its third phase today – and invested $400m into its 1.2 million cubic metre terminal in Fujairah.

This brings its total investment in Asia, Middle East and Africa to nearly $1 billion, Saeed Khoory, who is also Enoc's Group Chief Executive, said.

"The outlook for the terminals market is good in the short to medium term. But trading volumes have fallen, and traders are looking for terminals to store their products, so our tanks are close to 100 per cent occupancy rates now," Khoory said.

The view is shared by European trader Trafigura, which is relying on its storage capacity to deliver record profits this fiscal year, in a prompt oil market that will stay weak for months, its senior executive said.

Horizon is also exploring opportunities to build storage facilities in East Africa, Vietnam and China over the medium term, he added.

But due to the worsening global economic crisis, the group has delayed its plans to build a storage facility in Indonesia until oil demand in the region recovers.

"We have identified a local partner in Indonesia and our plans are at an advanced stage. But we have put our plans on hold because of the impact of the financial crisis," Khoory said.

Horizon is spending $75m to expand the second phase of its Horizon Taeyoung Korea Terminals in Ulsan, South Korea, scheduled to open by end-April. It will have a capacity of 132,000 cubic metres to store clean oil products and chemicals.

It will also pump $150m into building the first phase of its Horizon Tangier Terminals in Morocco, set to start operations in the first quarter of next year, Khoory said.

The facility will have a capacity of 308,000 cubic metres, storing both clean products and fuel oil.

In Singapore, Horizon's facility will have a total capacity of 1.24 million cubic metres. All of the new capacity has already been leased out, Khoory said, but declined to name the customers.

Industry sources said Horizon's Singapore clients included European oil traders Trafigura and Vitol, South Korean refiner SK Energy and Kuwait's International Petroleum Group (IPG).

Horizon also has terminals in Djibouti, East Africa, Jebel Ali in the UAE, and Yanbu in Saudi Arabia.

While the outlook for the storage market is bright, oil demand remains bleak this year, Khoory added.

"The movement of products has fallen and traders are more cautious now.

Turnover rates for the products are down 25 per cent to 30 per cent compared to a year ago," he said.

"Our projection for oil demand this year is quite grim. We do not think demand will go up substantially, at least not before the first quarter of next year," Khoory of Horizon said.

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