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Eric Ng

The estuary island project will be the largest logistics facility in the region

Oil services provider Titan (Holdings) will form a US$120 million joint venture to build the largest fuel-oil transport and storage facility in the Pearl River delta.

The  company is hoping the joint venture - in which it will have a 45 per cent stake - will tap Guangdong province's fast-growing demand for fuel oil amid the mainland's chronic power shortages.

'The construction of large-scale oil storage facilities in the area has immense implications to both the group's business expansion and the oil product supply and economic development of the south China region,' Titan chairman Tsoi Tin-chun said yesterday.

The other joint-venture partners are the municipal government-owned Guangzhou Xiaohu Island Investment and Construction, which will own a 30 per cent stake, and oil trader China Arts Huahai, which will have a 25 per cent interest.

The project will be  on Xiaohu,  one of the river estuary islands south of Guangzhou.

It is part of an oil and petrochemical industry park in the Guangzhou Nansha Economic and Technological Development Zone, where Henry Fok Ying-tung plans to invest about HK$2.5 billion in recreational facilities and a technology park.

Speaking at the project's ground-breaking ceremony yesterday,  Titan deputy chairman Zheng Dunxun said the venture hoped to realise as much as four billion yuan in annual turnover.

To be built in three phases, the storage facility will ultimately have the capacity to hold one million cubic metres of oil products, at a cost of US$120 million.

First-phase development includes 370,000 cubic metres of storage facilities  to be built by the middle of next year at a cost of US$29 million.

Vice-president Sun Zhong said Titan was undecided about when to start the second and third phases of the venture, and the decision would hinge on demand and other competing projects.

BP recently formed an US$86 million joint venture with Guangzhou Development Industry Holding, in which it  has a 40 per cent stake. Its 360,000-tonne oil storage facilities are expected to be completed in  the first quarter.

State-owned Guangdong Enterprises also has 350,000 tonnes of storage facilities on the island.

The three projects will provide feedstock for dozens of chemical plants to be set up there.

'A big problem in the delta is that the oil vessels have to trans-ship their oil to smaller vessels when they come in, which results in congestion, dangerous water traffic conditions and pollution,' Titan vice-president of finance Patrick Li said. 'After completion of two oil terminals with 80,000-tonne capacity, the vessels will directly berth at the terminal.'



Titan forms US$120m delta venture for fuel-oil depot