China Petroleum and Chemical Corporation (Sinopec) has announced that it would borrow more than US$500mn to build an oil storage facility at Fujairah Port, outside the Strait of Hormuz
Last month, Sinopec and a Singaporean partner, Concord Energy, raised a US$252mn loan for the oil storage facility.
Fujairah's expansion as a fuel-storage site came as credit costs decline in the UAE and the Gulf Cooperation Council's nations. Borrowers in the region would be paying the lowest interest rates since 2010, according to data compiled by Bloomberg.
Investors have been betting that demand for refined oil products in a region holding 48 per cent of the world's crude reserves would boost their profits from storing fuel in Fujairah.
Prerit Goel, company director for Gulf Petrochem, said that it had also planned to expand a 412,000 cubic metre storage facility that was inaugurated last month in the port.
Aamir Habib of Credit Europe Bank said, "For at least the next two to three years, trading growth in Fujairah will be on the upside because of demand in the region.
"The market for storage in Fujairah is supported by trading in bunker fuel and refined products."
