Iran plans to play a bigger role in crude storage and shipment in the Middle East by transforming Qeshm Island in the Strait of Hormuz into a major oil loading and bunkering hub.
Iran's Machine Sazi Arak, an engineering, procurement and construction contracting company, has signed an agreement with a Chinese metal producer to develop the project estimated to cost $550 million, IRNA reported.
Iran's Teachers Investment Fund is listed as one of the financers of the project, but its volume of investment was not specified.
The facilities will accommodate 10 million barrels of crude and petroleum products in the first phase and will have a total storage capacity of up to 30 million barrels.
The project is aimed at catching up with Middle East rivals, particularly the UAE that has tightened its grip on storage bunkering business in the region through its Fujairah Oil Terminal that was launched in 2012.
MSA's CEO Amirhossein Rezaei said on the sidelines of signing the agreement that Qeshm Island has a geopolitical advantage to boost storage and bunkering of Iranian crude and petroleum products.
IRNA did not mention when or where the agreement was signed.
------- $150m Turnover
Iran can gross between $120 million and $150 million per year from leasing its crude storage facilities in Qeshm, Rezaei said, adding that the volume can double in the long run.
"Oil storage is a profitable business … Qeshm Island can turn into a regional hub for bunkering and storage of crude and even overtake Fujairah," Rezai noted.
According to reports, Iranian fuel oil was mainly offered from the UAE port and bunkering hub of Fujairah during the sanctions, a move to offset western sanctions that barred international companies from doing business in Iran or purchase its crude firsthand.
Iran has also used its own crude tankers to sail directly to Fujairah, saving buyers costly freight charges.
Iran, the third-largest producer of the Organization of Petroleum Exporting Countries, plans an extensive expansion of its terminals in the Persian Gulf and Sea of Oman to boost export of crude oil as the engine of its sluggish economy.
Iran's largest operational oil terminal is located on Kharg Island in the Persian Gulf. Three foreign vessels loaded 4 million barrels of crude oil from Kharg Oil Terminal for marketing in Europe in what was the first major shipment of Iranian crude to international markets after the January lifting of sanctions.
The country is also taking steps to develop its Makran coasts along the Sea of Oman to meet its rising crude export capacity.
New bunkering facilities on the coasts of Makran would significantly reduce shipping costs for Iranian and international vessels and spare them a lengthy voyage through the Strait of Hormoz all the way to Kharg, Mahshahr and Asalouyeh oil and gas terminals.
