OREANDA-NEWS. June 26, 2013. Sinopec Kantons, a crude oil trading and logistics arm of China Petroleum & Chemical (Sinopec), says it will selectively acquire and build its own fuel storage facilities internationally.

For crude oil trader, it's buy or build with storage facilities, ensuring stable supply. It said the objective was to ensure a stable supply of facilities and help Sinopec cut logistics costs as it expanded overseas.

The previously sleepy firm caught investors' attention after it signed several deals in the past year to buy or build major fuel storage facilities in Indonesia, the United Arab Emirates and Europe, and raised HKD5.2 billion in the past 18 months by selling new shares to fund its expansion.

"As Sinopec's operation becomes international, it needs more storage support, and this brings us good opportunities," said Sinopec Kantons company secretary George Li Wenping.

Asked why Sinopec chooses to build and own facilities abroad instead of leasing capacity, he said: "Sinopec is not averse to renting, but owning facilities would ensure stability of capacity supply … we will selectively build facilities where demand is large."

Analysts said this would enhance China's energy security. Sinopec is the country's largest petroleum fuel producer and distributor and imports 80 per cent of its crude oil needs.

Early this year, Sinopec Kantons acquired a 50 per cent stake in a firm that plans to build 1.16 million cubic metres of storage facilities in the UAE port of Fujairah, the world's second-biggest vessel refuelling port. They will cost USD340 million.

Li said the project would capture opportunities from the 400,000 barrels per day oil refinery under construction by a joint venture between Sinopec's parent, China Petrochemical, and Saudi Aramco, the state-backed oil and gas giant, in Yanbu, Saudi Arabia. It is expected to come on stream late next year.

"More stringent environmental protection standards in Europe means many refineries there have been closed, which opens up opportunities for the Yanbu refinery to fill the gap," Li said.

In Southeast Asia, Sinopec Kantons took a 95 per cent stake in a firm that will build 2.6 million cubic metres of storage tanks in Indonesia's Batam Island, near Singapore.

"It is a good location, since China-bound oil traffic must pass through the Malacca Strait," Li said.