Oil trading companies are dramatically expanding their footprint in Dubai, opening new offices or increasing staff numbers as they attempt to capitalize on the growing refining activity and new products being developed in the Gulf Arab region.
To date, 22 oil products traders, including Chemoil, Litasco – the trading arm of Russian oil company Lukoil – and Cargill, and four crude trading companies have offices in Dubai, according to Reuters. Oil and gas mega-producer Petrochina has set up a crude oil trading desk this year and is also considering acquiring or building an oil terminal facility in the UAE.
"We have 25 people at the moment, 18 people are on the trading floor in shipping, oil, products," a trader from a US firm told Reuters. "We have an expansion plan in place despite the recession. We look at a year-on-year growth of 5 to 10 per cent, adding more staff and revenues."
US oil firm ConocoPhillips and a unit of Thailand's PTT opened trading operations in Dubai in 2007. Much of this is down to Dubai's commitments to significantly expand it's port facilities, say industry insiders. Storage capacity in Fujairah is estimated at between 2.5 million and three million cubic metres, and future expansions could raise it to up to 6.5 million to seven million cubic metres.
A surge in oil refining in India and the Middle East could eventually turn Dubai into a trading hub to rival Singapore, say analysts. But much depends on the emirate's capacity to deal with derivatives for hedging price risk. In the past, Dubai's role has focused on oil sales rather than trade. Increased refining activity and new port capacity could change that.
