Dialog, Vopak Sign Customers for Oil Storage Terminal

(Corrects designation of Ngau in second paragraph in story published on Dec. 20.)

Dialog Group Bhd., (DLG) Malaysia’s second-biggest oil and gas services provider, said it signed some customers for the 1.9 billion-ringgit ($620 million) storage terminal it’s developing with Royal Vopak NV. (VPK)

Talks with other potential clients are continuing, Dialog Executive Chairman Ngau Boon Keat said in an interview Dec. 18 at Pengerang, Malaysia’s southern Johor state neighboring Singapore.

Dialog, Vopak and local government are developing the site at Pengerang, with initial capacity of 1.3 million cubic meters, to meet rising demand for oil storage in Asia and as space in Singapore dwindles. The companies are betting on the terminal’s location to capture trade flow between China, India and Asia, Ngau said at the site.

“Our location is blessed with 24-meter deep natural berth able to bring in very large crude carriers,” said Law Say Huat, chief executive officer of the venture developing the Pengerang terminal. “We are offering an alternative to the crude oil traders, refiners, or the suppliers to be able to bring here to blend up, to break bulk or to make bulk.”

The tanks will be for clean products and crude oil and will begin operating from 2014, Ngau said. Clean products include fuels such as gasoline, naphtha, diesel and kerosene. The company has no immediate plans to build fuel oil tanks.

“At the moment, there is quite a lot fuel oil storage,” Ngau said. “We’re more targeting crude oil storage.”

Profit Boost

The project will help drive annual profit growth at Dialog by more than 20 percent in the next few years, Ngau said. Earnings will also be supported by ventures to provide services to oil and gas explorers, he said.

Dialog last month said it will take a 50 percent stake in Halliburton Bayan Petroleum, which has a $1.2 billion contract to provide services for a oil field off eastern Sarawak state. Dialog is also partnering with Roc Oil Malaysia (Holdings) Sdn. to develop a cluster of fields off Sarawak.

“Over the next three years we might have a quantum leap because we have invested in the terminal and we also have the upstream side,” Ngau said.

Dialog and Vopak are also planning to develop a 4.1 billion ringgit liquefied natural gas terminal in the same area as part of future expansion, the companies said in September.

To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editor responsible for this story: Barry Porter at bporter10@bloomberg.net

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