(EnergyAsia, October 10 2011, Monday) — China Aviation Oil (Singapore) Corporation Ltd (CAO), Asia’s largest physical jet fuel trader, said it has agreed to pay 34-billion won for a 26% stake in Oilhub Korea Yeosu Co Ltd (OKYC) which is building a fuel storage terminal in the South Korean port city of Yeosu. (US$1=1,167 won).
OKYC will develop, own, operate, manage and maintain the NEA Hub Terminal, which has the capacity to store 4.22 million barrels of products and 3.96 million barrels of crude oil.
CAO will be the second largest shareholder of OKYC after Korea National Oil Corporation (KNOC), which will hold 29% of total issued shares of OKYC. SK Energy Co Ltd and GS Caltex Corp will continue to hold 11% equity stake while the remaining issued share capital of OKYC will be held by Samsung C&T Corp and LG International Corp.
CAO said the NEA Hub Terminal is strategically located, requiring only 1.88 days and 1.21 days of shipping time to the cities of Tianjin and Shanghai in China, respectively. The terminal is able to support trading activities to the west coast of the US and Southeast Asia.
Comprising four berths with a draft of 17.8 metres and capacities ranging between 10,000 to 200,000 dead-weight tonnage (DWT), the terminal has access to the adjacent 330,000 DWT very-large crude carrier (VLCC) jetty owned by KNOC and is located near the GS Caltex oil refinery.
Construction of the 1.3-million-cubic metre terminal started in February this year and is expected to complete by end-2012.
CAO said it will be leasing the tanks from OKYC to store middle distillates on a long-term basis.
Describing it as synergetic to its jet fuel trading business, CAO’s CEO, Meng Fanqiu, said:
“CAO’s investment in OKYC is in line with its oil storage investment strategy. NEA Hub Terminal is located in South Korea, which is one of CAO’s important jet fuel supply source. It is also close to CAO’s key customers in the China.
“We expect this investment to contribute positively to CAO’s bottom line from FY2013. CAO’s access to (the) tterminal will also strengthen CAO’s ability to ensure certainty of jet fuel supply to its China customers and broaden its trading opportunities to supply jet fuel and gasoil to other markets.”
As the terminal is located in a foreign investment zone, foreign equity partners of OKYC would be eligible for tax concessions under the Foreign Investment Promotion Act of Korea.