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Chinese major to develop oil storage terminal in Indonesia

12th October 2012

Sinopec announces USD 850m project to develop ‘largest oil terminal in Southeast Asia’

Chinese major to develop oil storage terminal in Indonesia
The project will cover the construction of storage for up to 16 million barrels of crude and refined fuels

Asia's largest refiner is developing an oil storage terminal in Indonesia as part of plans to boost petroleum trading and downstream infrastructure. Experts say the terminal is to become the largest in Southeast Asia.

China’s second-largest oil producer, Sinopec will build a USD 850m PT West Point Terminal on 360 hectares in Indonesia’s Batam free trade zone (FTZ), the company told the Hong Kong stock exchange in a filing on Tuesday.

The project is Sinopec’s first facility of such size located close to Asia’s oil trading hub, Singapore. It will cover the construction of storage for up to 16 million barrels of crude and refined fuels.

Once completed, the project will allow the company to have the oil refined in Indonesia instead of transporting it back to China. In addition, the project's location will help Sinopec increase its market shares in Southeast Asia, Northeast Asia and the Middle East, the firm said.

"I think the terminal has very little to do with energy security for China. It is a commercial decision," said Victor Shum, managing director at consultancy firm IHS Purvin and Gertz in Singapore.

"Sinopec has a trading presence in Singapore and I imagine having a storage terminal in Batam, bordering Singapore, would be used to support their trading activity in the region," he added.

A refinery and petrochemical project are also being considered in a second phase of development.

This is China's second major oil storage project this week. On Tuesday, China National Offshore Oil Corp (CNOOC) announced the beginning of the construction of the USD 197m first phase of a berth and oil products storage hub at the port of Yantai in the northeastern Shandong province

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