Unique tank farm in East Port Said Port on the north side of Suez Canal will serve global shipping market and be a backup to Egypt's national energy security policy
Citadel Capital (CCAP.CA on the EGX), the leading investment company in Africa and the Middle East, announced today that core platform company Mashreq Petroleum has signed a 25-year concession agreement with the East Port Said Port Authority. The agreement is extendable by up to five years based on a 90% achievement rate of operational targets and will allow Mashreq to build the first independent tank terminal in Egypt.
“Coming on the heels of Cabinet-level approval for the project, the concession agreement between Mashreq and the Port Said Port Authority clears the way for the fast-tracking of this critical project, which stands as a backup to Egypt’s national energy security,” said Mashreq Petroleum Chairman and Managing Director Dr. Tamer Abubakr.
Mashreq Petroleum is a core platform company of Citadel Capital established in 2004 to build and operate the first tank terminal and logistics hub of its kind in the region. The original contract for Mashreq was signed on December 10th, 2005 under law number 8 of 1997.
The EGP 3 billion facility will have capacity for up to 800,000 metric tons of product, including liquid bulk (fuel oil, gasoil, naphtha and jet fuel) and bunker fuels. Mashreq will have an annual storage capacity of 10 million metric tons per year and an annual bunkering capacity of 2-3 million tons with three berths that will accommodate tankers up to 120,000 DWT and four berths for bunkering barges. The project will be completed in several phases.
The facility will primarily serve the liquid bulk market in the Far East, the Middle East and the broader Mediterranean region. Mashreq will also provide fuel bunkering services for ships transiting the Suez Canal, to capitalize on the unique location of the world’s busiest maritime route, with more than 20,000 vessels transiting annually. Total traffic through the Canal represents 10% of global maritime transport and approximately 22% of container trade worldwide.
Mashreq’s growth prospects in the storage market are based on both the fast-rising rate at which petroleum products are transiting the Suez Canal as well as the Middle East and Mediterranean regions’ status as deficit markets for diesel and gasoil. Transportation of petroleum products through the Canal reached an estimated 110 million tons in 2012, growing at a rate of around 19% annually over the previous eight years, while there remains a notable shortage in bunkering services in the region.
The concession is based on a build-operate-transfer (BOT) system for 25 years, extendable by one year for every five years during which the project achieves at least 90% of its operational targets. In total this will result in a 30-year concession in addition to a three-year grace period for construction.
This strategically vital fuel bunkering and storage facility in Port Said Port supports the Suez Canal as the world’s leading maritime trade route for both commodities and petroleum products. The project is expected to help attract global companies and large shipping lines to operate at the port and simultaneously help ease the nation’s shortage of refined products by facilitating imports. In cooperation with EGPC, the facility will be linked to the national petroleum pipeline grid at a junction point located 17 kilometers south of the project.
Mashreq will also help stimulate the growth of additional sectors in East Port Said, including the planned establishment of new power generation facilities and an industrial zone.
All necessary regulatory and governmental approvals have been obtained, including approved environmental impact assessment reports. Mashreq has also completed the design of its tank farm.
Energy is one of Citadel Capital’s five core industries of focus alongside transportation, agrifoods, mining and cement. Citadel Capital holds a 25% ownership stake in Mashreq.
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading investment company in Africa with a focus on Egypt, East Africa and North Africa. Citadel Capital controls investments of US$ 9.5 billion and focuses on 5 core industries: Energy, transportation, agrifoods, mining and cement. For more information, please visit www.citadelcapital.com.
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