Planned capacity expansions in Fujairah’s oil storage sector are likely to be delayed due to overcapacity according to a manager from one of the Fujairah’s largest tank storage groups.

Oil storage capacity in Fujairah, on the east coast of the UAE, has increased significantly in recent years with several new players adding tankage along with established companies.

Tarun Arora, general manager at UAE-Singapore joint venture GPS Chemoil, said that expansions slowed down in 2014 as concerns about overcapacity emerged.

“Much of the capacity that was supposed to be added in 2014 is now being added in 2015,” said Arora speaking at the Tank Storage Middle East conference in Abu Dhabi on 26 January.

Some proposed schemes to expand capacity have been shelved due to the overcapacity problem, according to Arora.

According to statistics from the Port of Fujairah, the total capacity of oil storage in 2014 was forecast to reach 8.58 million cubic metres, but this is now the projection for 2015. This represents a significant increase from the 3.16 million cubic metres of capacity at the port in 2011.

Due to project delays, the forecast for total oil storage capacity in 2017 has been revised down to 10.19 million cubic metres from a previous projection of 11.38 million cubic metres.

Companies that had planned expansions include GPS Chemoil, Dutch-UAE joint venture Vopak Horizon, UAE-based Gulf Petrochem and Swiss-Azeri group Socar Aurora.

“Are we in danger of overcapacity?” said Arora. “Market forces have tendency to balance themselves and that is what is happening in Fujairah.” 

Positive developments on plans by Abu Dhabi’s International Petroleum Development Company (Ipic) to build a new refinery in Fujairah are likely to spur further investments in oil storage at the port. The project is currently delayed at the engineering, procurement and construction (EPC) tender phase.