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Source: Reuters

Petrochina plans Dubai move, eyes oil storage -trade

Published: 25 Jan 2010 22:18:45 PST

DUBAI/SINGAPORE, Jan 26 - Petrochina's rapidly expanding international trading network will soon include the Middle East when it sets up an energy trade desk in the regional financial and commodities trading hub of Dubai, industry sources said.

Asia's largest oil and gas producer, PetroChina <0857.HK> is also studying the option of either acquiring or building an oil terminal facility in the United Arab Emirates, the sources said.

"They have approached us to discuss the economic feasibility of developing a terminal in the UAE," a trader based in the Middle East said.

"They have not yet taken a decision, but they have been studying the option for about a year now."

The Chinese energy giant was also expected to set up a three-man crude trading desk this year in Dubai, which is fast becoming a regional oil and commodities trading hub rivalling the likes of New York, London and Singapore, sources said.

Recently U.S. oil firm ConocoPhillips <COP.N> and a unit of Thailand's PTT <PTT.BK> joined the likes of Vitol, BP and Lukoil to open Gulf trading outposts. [ID:nLG290392]

Shell's trading arm has also expanded its trading desk in Dubai, along with Trafigura who have also added new staff in the past year.

Sources familiar with PetroChina's plans to set up operations in Dubai said the Chinese firm has already relocated a crude trader from Singapore to the emirate.

"They are now looking at setting up an office here, they are in that process of getting the logistics in order," a Middle East based trader said.

"Initially they will have three crude traders, and then the office will likely expand, but they haven't really showed their cards as to what they will be doing here."

Most of the region's producers, including Saudi Arabia, Iran and Kuwait effectively bar their customers from trading their crude. But they take a far more lenient view of refined fuels like gasoline and diesel, for which import demand has risen as a petrodollar revenue boom in recent years has fuelled strong consumption growth.

"They may be positioning themselves for the possibility that there will be some form of commercial crude business developing once Abu Dhabi completes its pipeline into Fujairah," a crude trader from a Gulf Arab producer said.

The United Arab Emirates will complete a pipeline allowing the world's third-largest oil exporter to pump around 60 percent of its crude exports to Fujairah, a port on the Gulf of Oman.


The Chinese oil giant is flexing its muscle all across the world, making sure it is strategically placed to exploit new commercial business that could emerge in the region because of new refining capacity.

The Chinese oil firm's trading operations are located in Asia, the United States and Europe. [ID:nPEK313671]

PetroChina is presently in talks to take over about 5 million barrels of heavy oil storage in the Caribbean, which was formerly leased by Saudi Aramco. [ID:nN30225998]

"At the moment it (office in Singapore) could serve as a listening post for the company, and then it will slowly develop to something more," a Middle East based trader said.

"They probably anticipate Dubai evolving into a price setting hub for the Middle East, the way Singapore has for Asia."

But with China's growing importance on the global refined fuel markets, as its refineries run at full tilt and hit fresh export highs for distillates, PetroChina could also be looking for an outlet for its products into the less mature East African markets.

"There is still quiet a bit of potential in the region, they could be looking to grab market share in Africa," a Singapore based trader said.

"Everyone is out to lay claim to new incremental demand, Africa is still untapped, risky business for some, but not so much for a company like PetroChina."

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