OREANDA-NEWS. March 30, 2011. Chinese oil major PetroChina is in talks with the government of Fujairah to build oil storage facilities at the Fujairah port, industry and port sources told.

Petrochina, the world's second-most valuable oil firm after Exxon Mobil, is looking to build up to 1 million cubic meters of storage capacity at the United Arab Emirates port, the sources said.

"They (PetroChina) have two options available for them," one source said on the condition of anonymity. "They can build on their own or they can work with someone else, it's not clear which option they will pick yet."

Vopak Horizon Fujairah, a joint venture between the Dutch-based Royal Vopak, Horizon Terminals, the government of Fujairah and Kuwait's Independent Petroleum Group (IPG), was among the potential partners of PetroChina, if the company opted to take on one, trade sources said.

International oil companies (IOCs) are racing to capture precious oil storage capacity worldwide and Fujairah, located comfortably outside the sensitive straits of Hormuz, is emerging as a major storage hub in the Middle East.

"PetroChina is working with the Fujairah government," the source said. There was no deadline set for the East Asian oil giant to make a decision on how to proceed, he said, but added that increasing competition might speed up the process.

"I'm sure they'll make a decision soon. So many people are now interested in Fujairah, they will have pressure to make a decision fairly soon," he said.

PetroChina was not immediately available for comment.

The port, which has established itself as a major bunkering hub along with Singapore and Rotterdam, is now aiming to do the same for oil storage by more than doubling its capacity to over 7 million cubic meters by 2012 from the current 3 million cubic meters.

"China is a big market and Chinese players coming to Fujairah is very important to us," one port official said. "We expect to see more and more Chinese companies here."

The port official said there were some early talks with other Chinese companies but did not elaborate.

PetroChina has been aggressively pursuing opportunities across the world to expand its international trading network and buy refineries.

It has set up a trading desk in Dubai 2010.

In early 2010, via its trading vehicle Chinaoil and overseas investment arm PetroChina International, the Chinese major took over around five million barrels of storage in the Caribbean that was formerly leased by Saudi Aramco.