Hans allots 400m yuan for storage expansion

PUBLISHED : Wednesday, 13 May, 2009, 12:00am
UPDATED : Wednesday, 13 May, 2009, 12:00am

Hans Energy, a major supplier of storage and logistics services for fuel and petrochemicals in the Pearl River Delta, has budgeted about 400 million yuan (HK$454.4 million) this year to complete the construction of new storage facilities in Dongguan and build a warehouse for dangerous solid chemicals in Panyu.

The expansion comes amid recovering demand for fuel and chemicals in the region, one of the mainland's biggest manufacturing hubs, whose exports have been hit hard by the global financial crisis.

'At the worst of the crisis in the fourth quarter, our tanks were less than half-full, but now most of them are full,' said chief financial officer Nicholas Fung Chi-kwan. 'Transshipment of chemicals at one point fell to zero as toys and electronic component producers stopped taking delivery of raw materials, but since the second half of March, volumes have returned to normal.'

The company, which has been supplying storage and logistics services on Xiaohu Island in Panyu since 1993 through a unit originally owned by Guangdong Investment Group, is close to finishing a refined-oil receiving terminal in Humen, Dongguan.

Hans Energy will build 85 oil tanks with a combined storage capacity of 258,000 cubic metres on a site next to the terminal. The terminal, tanks and land use rights cost 800 million yuan.

The new additions will raise Hans' oil and petrochemical storage capacity by 78 per cent from 330,450 cubic metres at its Xiaohu Island facilities.

Mr Fung said the firm had received expressions of interest from potential customers for more than 80 per cent of the new capacity but declined to disclose names because of commercial confidentiality.

The Humen project was originally slated for completion by late 2007, but a tightening of approval procedures by Beijing and the global financial crisis delayed the construction schedule, said Zhang Lei, the general manager of its Panyu subsidiary.

Meanwhile, Hans plans to start building soon a 100 million yuan warehouse for dangerous solid chemicals on the island, with a floor space of 35,000 square metres. Mr Fung estimated the internal rate of return at between 16 and 20 per cent, against 30 to 40 per cent for liquid fuel storage.