Sharjah-based refining and trading group Gulf Petrochem is looking at several major expansion projects in the UAE and overseas, after almost doubling its annual revenue target set in 2011.

Group director Prerit Goel tells MEED Gulf Petrochem had aimed to hit annual sales of $1bn by 2014, but actually surpassed this with revenues of $1.9bn in 2013.

“In 2014, we should be surpassing that figure with about 20-30 per cent growth,” says Goel, attributing the increase to rapid expansion in its core GCC and India markets, but also into Southeast Asia and East Africa.

Storage terminal

Gulf Petrochem opened its first oil storage terminal at the Port of Fujairah in early 2013, and is planning to build a new refinery on the same site in the coming years.

The $130m storage terminal has a capacity of 412,000 cubic metres to store oil products such as fuel oil, gas oil and cutter stock on the UAE’s Gulf of Oman coast; a significant expansion from the 35,000 cubic metres available at the company’s main operations in Hamriyah Free Zone in Sharjah.

“The Fujairah terminal that we set up last year is doing very well, so we gained top-line growth and also bottom-line growth through this,” says Goel. “The trading arm also gave us a lot of top-line growth because we started trading a lot of gas oil… and we became a preferred supplier to the bunkering market by doing export deliveries to a lot of bunker customers.”

Gulf Petrochem is now looking to expand storage capacity at Fujairah to accommodate its planned refinery and also cater to external demand for crude storage.

The Port of Fujairah is building a jetty to accommodate very large crude carriers (VLCCs), which will be connected to Gulf Petrochem’s and other oil storage operations located in the port.

New refinery

The refinery will have a capacity of 2 million tonnes a year (t/y) and will focus on processing heavy crude to produce bitumen and other heavy products such as fuel oil, gas oil and naphtha.

UK-based Wood McKenzie carried out a market study at the beginning of 2014, which was followed by Engineers India performing a technical-commercial study. Gulf Petrochem recently awarded a deal to a Houston-based company for the basic engineering.

“This [basic engineering contract] is for the technical validation of the previous study and a little bit towards the front-end engineering and design (feed),” says Goel. “We have given the firm 30 Latin American crudes to study and it is validating crude prices and product prices.”

Sharjah expansion

Gulf Petrochem is also expanding its Sharjah storage operations, having already started construction on a $60m project to boost the terminal’s capacity by 200,000 cubic metres to a total of 235,000 cubic metres. The scheme is expected to be completed in the first quarter of 2015 and will allow the group to accommodate bigger vessels.

“We never had crude storage in the UAE and we wanted to open crude storage to support our refining operation and bring in more crude for refinery,” says Goel. “There is also demand from people outside wanting storage. We also wanted to support petrochemicals production in India with storage and other products such as fuel oil, bitumen, base oils and gas oil, and middle and light distillates.”

Gulf Petrochem has consolidated its business operations into four segments: refining and manufacturing; oil trading and bunkering; oil storage; and shipping and logistics.

Budding conglomerate

Goel describes the group as a “budding oil conglomerate” as it has “bits and pieces of everything that a large national oil company would have”, but on a smaller scale.

In bitumen and base oils, Gulf Petrochem has focused on two products that are traditionally traded regionally and pushed them towards global trade.

“We set up offices in different parts of the world and started trading these products regionally, but we also looked at arbitrage levels globally and traded these products globally,” says Goel. “We tried to change it to more of a global trade and it really helped us.”

This has helped integrate these products into the group’s manufacturing operations – it uses bitumen to produce value-added products for road construction and base oils in its own greases and industrial lubricants plant.

Gulf Petrochem completed a pilot plant for the production of greases and lubricants in Sharjah in the fourth quarter of 2013, with a capacity of 1,000 tonnes a month.

“The market is here [in the GCC] and Africa, so it makes sense not to produce it in India but produce it here,” says Goel. “We are looking at approvals for exporting to Saudi Arabia and once all that happens we will expand it into a larger plant. As demand goes up, we plan to expand to 5,000 tonnes a month as the market picks up.”

Indian stake

In June, Gulf Petrochem acquired a 75 per cent stake in Mumbai-listed Sah Petroleums for about $10m, giving it additional lubricants and greases capacity and the Ipol brand of lubricants, which it plans to roll out across its international operations.

It is looking into the possibility of building or acquiring value-added bitumen plants in Oman and East Africa to be closer to construction sectors in its target markets.

The past 14 years have seen the company find a successful niche in lower-volume refined products in the Gulf since it was established in Sharjah in 1998.

With a new refinery and a significant expansion of its storage facilities on the horizon, Gulf Petrochem is becoming an increasingly significant player in the downstream sector in the UAE and the wider region.