Fri 18 Mar 2016 08:12

Aegean's Fujairah terminal 'at 100% capacity'


CEO says Fujairah is 'facing headwinds due to low prices and Iranian oil which has flooded the market'.



Aegean Marine Petroleum Network Inc. (AMPNI) says that its storage terminal in Fujairah, United Arab Emirates, is now operating at 100 percent capacity.

Speaking during the bunker firm's fourth-quarter and full-year earnings call, E. Nikolas Tavlarios, President of Aegean Marine Petroleum Network, said: "I'd like to provide an update on our Fujairah Oil Terminal. Our storage facility continues to operate at strong efficiency levels and is now performing at 100 percent capacity."

Tavlarios also alluded to difficulties, saying: "The bunkering market in Fujairah is, however, facing headwinds due to low prices and Iranian oil which has flooded the market with supply."

"We believe this market will return to equilibrium and remains an important part of our global supply network," Aegean's CEO added.

Commenting on leasing income from the Fujariah facility, Tavlarios said: "What we're seeing happen now - and it's happening slowly and some good little signs of it, but again, it's starting to happen - it's the rates creeping up. And as they should, and it really comes after having a year of experience of being an operator and seeing and the customers gaining confidence. But again, it's a big market there, but I think we're seeing the rates start to creep up. They will grow in the future.

"So I would say that as we look at what the contribution is of the Fujairah storage facility, it's essentially in line with what we expected and what we've talked about in the past."

Back in August, during the company's second-quarter conference call, Tavlarios had stated that Aegean was on target to reach 100 capacity by the end of 2015. At the time, the facility had a lease rate of 86 percent.

In terms of earnings before interest, tax, depreciation and amortization (EBITDA) contribution, the terminal was said to be on track to reach a figure of around US$12 million to $15 million per year, based on figures provided by Tavlarios.

Aegean's CEO commented during the second-quarter call: "I think we are still on track to see Fujairah getting to its $15 million level that we spoke of, right. So at $15 million you are talking about somewhere around $1.20 to $1.25 per month. So on that basis, again, you're going to be somewhere in that whole neighbourhood of - let's just say $3 million a quarter."

Tavlarios also said last year that margins from engaging in blending at the Fujairah facility were "somewhere between $5 and $10 a tonne on every tonne that's done from blended fuel".

"So as we begin to overlay that into our product mix there, we would expect our performance in that port to further improve," he added.

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