Asia Petroleum Hub, Johor, Malaysia

The Asia Petroleum Hub is one of the newest petroleum storage projects to be started in Asia and has the potential to become a major market for petroleum products in the region.

The facility was given the go-ahead by the Malaysian Government in March 2007 and broke ground in July 2007. The hub is being constructed on a 40ha manmade island in Mukim Serkat Daerah Pontian, near the port of Tanjung Pelepas, Johor in Malaysia.

The project is expected to cost some £220m (RM1.4bn) to build and is scheduled for completion in 2009. The hub is being built and will be owned by Asia Petroleum Hub Sdn Bhd (APH), which is 90% owned by KIC Oil and Gas a private oil company in Malaysia and 10% owned by Trek Perentis Sdn Bhd.

The land for the project was leased to Seaport Terminal by the Malaysian Government, which in turn has leased it to APH. The facility will be managed by Kadriah Intergrated Facilities Sdn Bhd, a company that manages oil terminals in Tanjung Pelepas and Westport for KIC Oil and Gas Ltd.

The finance for the project is being provided by CIMB Group (financial advisor and financier for the project). APH expects that the national oil company in Malaysia Petroliam Nasional Bhd will use the hub for storage.

WHY THE NEW HUB?

The concept behind the hub is to reduce the cost of landed petroleum products in Malaysia by cutting out the double handling charges that are usually levied on deliveries.

Shipments can be made directly from the source to the hub thus helping reduce government fuel subsidies (Malaysia will have more control over its own petroleum reserves). The hub will expect to attain world recognition and become a recognised market for global petroleum-trading activities. The hub can also act as a new supply chain for the area and may help attract foreign investment to the island.

ASIA PETROLEUM HUB FACILITIES

The petroleum hub has been designed with facilities to receive, store, blend and distribute petroleum products. The facility will also include break-bulk facilities for fully laden vessels of up to 350,000dwt.

The island will be accessible from the mainland using a bridge and will have an estimated product storage capacity of 950,000m³. The facility will also be equipped with seven fixed berths for vessels of up to 150,000dwt and there will also be a single point mooring system for Ultra Large Crude Carriers (ULCC).

The hub will also have loading facilities for tanker trucks for road deliveries inland, bunker barges for offshore bunkering of ships and oil product carriers for trading in the gasoline and petroleum products markets. There will also be facilities at the hub for the blending of fuel oil and gasoline so that the hub can produce different grades of these products for sale.

Products will include industrial and marine fuel oils, gasoline (unleaded), diesel (low sulphur), jet fuel and biodiesel products. It is believed that eventually the facility will handle 60 million tonnes of petroleum products a year and play host to over 2,000 vessels annually.

CONTRACTORS

Mott Macdonald has been asked by the operator APH to provide design services for the project and also to provide some Engineering, Procurement and Construction Management (EPCM).

Sam Mathew, project director for Mott MacDonald, commented: "We are delighted to be appointed for this prestigious project by APH. Mott MacDonald has a wealth of expertise in oil and gas consultancy on similar projects around the world and we look forward to demonstrating our skills by helping APH deliver a modern terminal that will place Malaysia at the heart of the World Petroleum Market."

Other contractors appointed by APH for the construction work on the project include Muhibbah Engineering Bhd (RM457m) and Nam Fatt Corporation Bhd (RM553m). In addition ZAQ Construction Sdn Bhd and QI-pmc Sdn Bhd will provide construction management services for the project.

In April 2007 Kencana HK Sdn Bhd (KHL) a subsidiary of Kencana Petroleum Bhd was awarded a subcontract for procurement, construction and commissioning on the hub.