Johor oil storage terminal plans RM90m expansion

23 February 2010 , By Business Times Singapore

Langsat Terminal inaugurates first phase of RM500m tankage project WITH continuing strong demand and limited supply of oil storage in Singapore, a newly-opened Johor oil storage terminal yesterday announced further expansion plans to try to capture terminalling business from Singapore-based oil traders.

Langsat Terminal, operated by Dialog Group, MISC and oil trader Trafigura at Tanjung Langsat, said it is investing a further RM90 million (S$37.3 million) to develop a third phase of 80,000 cubic metres, adding to the RM500 million investment in the first two completed phases of a total 400,000 cu m of storage.

It started up the 130,000 cu m of phase one (for naphtha and middle distillates) last September, with the 270,000 cu m phase two, for diesel and fuel oil storage, expected to be fully operational next month.

Announcing this at the inauguration of the first phase tankage yesterday, the chairman of Langsat Terminal (One), Ngau Boon Keat, said that additionally, it was also actively planning for the construction of another 170,000 cu m of storage capacity for Langsat Terminal, but did not give an investment figure for this.

While Langsat Terminal (One) is being used mainly by oil trader Trafigura, Mr Ngau said that 'we are also planning to acquire more land for construction of more tankage facilities for other customers as well.'

This clearly suggests that the Langsat terminal, about 48 km from the Republic, is targeting other Singapore oil traders which are currently finding it difficult to lease storage space in Singapore - the world's third largest oil trading hub.

Land scarce Singapore - with about 8 million cubic metres of oil storage capacity currently - is building the $890 million Jurong Rock Cavern, which is seen as more of a strategic oil storage facility.

JTC Corporation is also expected to decide by next month, once it finishes its feasibility studies, whether to build very large floating structures for oil storage by traders.

In the meantime, competition is clearly heating up from Johor, where besides Tanjong Langsat terminal, another oil trader, Vitol and MISC, is building a 841,000 cu m terminal at Tanjung Bin, with that facility scheduled to be completed by March 2012.