(EnergyAsia, August 25 2011, Friday) — SOCAR Trading, a subsidiary of the State Oil Company of Azerbaijan, is aiming to triple its oil trading volume over the next five years after securing a deal to store a total of 5.3 million barrels of crude and products in South Korea.
SOCAR Trading said the agreement with the Korea National Oil Corporation (KNOC) for a minimum two years with the option for a one-year extension will support its expansion plans in East Asia. Apart from earning a storage fee, South Korea will have access to the oil in the event of an emergency.
Building on last year’s revenues of US$19 billion, the Azerbaijan company will consider acquiring oil refineries and storage terminals to enhance its trading role as part of a long-term strategy to reduce its overwhelming dependence on marketing of the country’s crude. SOCAR Trading has the responsibility for marketing about 80% of Azeri Light crude from the Azeri-Chirag-Guneshli (ACG) fields in the Caspian Sea.
This dependence is shaping up to be the company’s Achilles heel as the ACG fields are in decline after recently peaking at around one million b/d.
Apart from South Korea, SOCAR Trading is also targeting to expand its oil trading and storage activities in Fujairah in the UAE and Singapore. The company expects to start up a new storage terminal in Fujairah port later this year.