Prostar Capital last week announced that after 22 months of construction and preparation, the Fujairah Oil Terminal (FOT) had entered its operational phase.
The US fund manager acquired an interest in the terminal from Singapore-based Concord Energy Group in September 2013, following commencement of construction in March that year.
“The team that was involved in commissioning the facility and putting the people in place to operate it did a fantastic job,” Bickerton said in an interview at Infrastructure Investor's Berlin Summit last week, adding that “the response of the market has been very, very positive.”
The facility is located in the Gulf of Oman outside the Straits of Hormuz in the Arabian Sea, and offers services including the loading and discharge of partially-laden very large crude carriers (VLCCs) for crude and fuel oil, the blending of crude, fuel and gasoline, the loading of combination cargoes for regional and East African markets, and the supply of bunker fuel.
Concord originally sold 50 percent of its stake in the company in January 2013 to Sinomart, a 100 percent-owned subsidiary holding of Chinese oil and gas company Sinopec Kantons Holdings. At that time, Concord Energy reported that it had signed binding agreements with a consortium of six international banks to the tune of $252 million.
According to Bickerton, the choice to invest during the project's construction phase, while not absent risk, has since proven to be a good move for Prostar.
“Construction on the project went absolutely according to plan. It was handed over by the contractor at the end of December 2014 and commenced operations at the end of January 2015. The official opening was held on March 11, and FOT has already signed a number of storage contracts with high-quality customers” he said.
Bickerton said there was a strong rationale for investing in oil storage facilities as such assets most often produced “very highly predictable, long-term cash flow.”
“[Oil storage] is a key part of the global energy supply chain, with the Port of Fujairah already the world's second largest ship bunkering port behind Singapore,” Bickerton said. “This bodes well for strong and growing demand for this strategically located oil storage terminal.”