Oman’s ambitious goal of building the biggest oil-storage facility in the Middle East is finally progressing, more than seven years after the Gulf sultanate announced the plan.
Oman has built eight oil storage tanks that will make up part of what the sultanate hopes will be the largest oil storage facility in the Middle East and is preparing to build several others, for a total capacity of 25 million barrels.
Bloomberg reports, citing unnamed sources in the know, that the tanks will be offered to oil producers and traders either for storage or as a temporary stop along the way to final consumers for those who want to avoid transporting their oil through the Strait of Hormuz, the source said.
Dubbed the Ras Markaz Crude Oil Park, the storage facility is 600 miles from the Strait of Hormuz, the biggest oil chokepoint in the world, and a risky place because of the hostility between Iran and Saudi Arabia.
The park will benefit all involved. For Oman, it will be a source of additional government revenue at a time when the long-term sustainability of crude oil export revenues is more uncertain than ever before. For traders and oil producers, the facility will be a welcome addition to what has turned out to be insufficient storage space on a global scale: a fact that was highlighted during the past few months.
The spread of the coronavirus pandemic forced national lockdowns for all big oil consumers, which led to substantial builds in oil inventories to such an extent that it raised fears that the available storage space would not be enough to contain all the unsold and unsellable oil.
In this respect, then, Oman, is adding much needed capacity in light of wide expectations that it will take a while before oil demand recovers to anything resembling its pre-crisis level. The final plan, according to the company behind the project, Oman Tank Terminal Co., is to have storage capacity of 200 million barrels of crude.
The Ras Markaz Crude Oil Park, however, will also serve as storage for a refinery, yet to be completed at the sight of the eight tanks, which together can hold 5.7 million barrels of crude. The Duqm refinery should come on stream next year.