Dalian Port 'confident' of plans to expand oil operations

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Aug. 25 -- The Port of Dalian, aiming to become a major gateway for China’s oil imports, plans to spend $117 million or more this year on the necessary storage and berthing infrastructure.

"We have confidence in the future of our oil business," said Dalian Port Chairman Sun Hong, while its executive director Jiang Luning said total oil storage capacity will increase by yearend to 3.25 million cu m from the current 600,000 cu m.

According to Jiang, the port will add 1.25 million cu m of storage space by yearend through a joint venture with PetroChina International Corp. and that PetroChina International Corp. will add another 1.4 million cu m on its own.

Jian said the development is required by increasing demand as the port’s oil storage capacity is insufficient for its international clients, some of whom want to lease oil storage facilities from the port.

Jian also said the port’s berthing infrastructure would be upgraded to enable the reception of 450,000-dwt ships by yearend, up from the current capacity of 300,000 dwt.

In April, the port announced that it handled 34.9 million tonnes of oil and liquefied chemicals in 2008, an increase of 1.3% over 2007. The port also said it handled 20.1 million tonnes of imported oil in 2008, an increase of 8.9% over 2007.

At the time, the port said it received government approval to use some of its 12 newly constructed oil storage tanks to store bonded oil, which “expanded its storage and trans-shipment business for crude oil and enhanced profitability.”

The port also underlined the importance of the new facilities to be constructed by and with PetroChina, saying that their operation would help it to achieve “continuous business growth” by increasing its oil throughput.

According to Roslyn Ji, in a recent report for Core Pacific-Yamaichi, oil contributed 42.2% of Dalian Port's revenue and 54.1% of its gross profit in 2008.

As a result, Ji said, "We expect oil to continue to drive the company's growth over the next few years on the back of Dalian Port's unique position as one of the strategic oil reserve bases in China."

In March, the port announced plans to set up an LNG terminal joint venture with PetroChina, focusing on a receiving terminal in the city of Xingang, Dalian, which is expected to be put into operation in 2011.

PetroChina will hold a majority stake of 75% in the joint venture, while Dalian Port will own a 20% stake, with the remaining 5% held by Dalian Construction Investment Corp., a local government investment arm.

Contact Eric Watkins at hippalus@yahoo.com.

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