New Shore Tanks in Basrah - Case Study Example

Proposal: To Build New Shore Tanks in Basrah, Iraq Crude petroleum, refined petroleum, alkylbenzenes and alkylnapththalenes are some of the major exports of Iraq whereas refined petroleum is one of the five main imports of Iraq. Iraq exports its products to India, South Korea, Spain, Italy, and China whereas five countries that are the top importers to Iraq are Turkey, South Korea, India, China, and Germany (atlas.media.mit.edu, n.d.). Establishment of shore tanks in Basrah, Iraq is critically important for sustainable growth of the country’s economy and its strong position in the international political scenario. “Iraq is a challenging and difficult place, not just because of the security issues. Despite them, we believe the opportunity is so big that we cannot afford not to be here. The potential in terms of business is huge” (Douglas cited in ska-arabia.com, n.d.). This imparts the need to construct shore tanks to accommodate the growing import/export needs of Basrah, Iraq. The Garraf oilfield in Southern Iraq began production in 2013 and has the plan of taking the production target plateau by 2017 to 230,000 (eia, 2014). Oil exports from the new oil terminals of Basrah are presently not affected by the political unrest in the region, though this may change in the future. Oil prices fluctuate below the range of $90 to $120 per barrel (Morse et al., 2013). The future is even harder to predict if the proxy war widens between Iran and Saudi Arabia because of conflict that is hitherto limited to Syria (Matt, 2014). It would be a prudent approach for Iraq to plan new oil dependent infrastructure including airports and motorways to prepare for oil shortages. The main competitor in this area is SKA Energy. SKA Energy has started to establish a number of fuel-storage facilities in Basra, Iraq. The strategic positioning of the 20,000 metric tons imported state-of-the-art terminal of refined product storage at Khor Al Zubair Port helps accommodate the needs arising from the efficiently growing domestic as well as international fuel requirements. The fuel storage terminal of SKA lays the basis of a complex project aimed at building more tank storage facilities to increase the fuel storage to 90,000 metric tons so that the export and import fuel markets’ needs can be served. The proposed shore tanks will be high in capacity accommodating several hundred thousand tons of oil for long-range haulage. Certain specialized inland-waterway shore tanks will also be developed to facilitate the operations on canals and rivers with several thousand tons of average cargo capacity. The proposal advocates development of shore tanks of the class very large crude carriers (VLCC) (Malaccamax) with the size of length, beam, and draught being 330 m, 60 m, and 20 m respectively and with the DWT ranging from 200,000 t to 315,000 t (The Oil Exchange, 2013). In addition to them, shore tanks of the class ultra large crude carriers (ULCC) with the size of length, width, and draught being 415 m, 63 m, and 35 m will also be developed with the DWT ranging from 320,000 t to 550,000 t (The Oil Exchange, 2013). Considering the high probability for Iraq to expand its exports and imports in the petroleum products, the shore tanks will be chemically equipped in the formation to carry a wide range of products that may include but will not be limited to liquefied natural gas (LNG), liquefied petroleum gas (LPG), oil, and other chemicals. Chinese companies will be tasked with the construction and installation of shore tanks in Basrah Iraq for two main reasons; China has been one of the major countries exporting products to Iraq and is nearer to Iraq compared to other countries having companies that specialize in this field like South Korea. This will serve to minimize the development cost for Iraq. Besides, Chinese companies have been into the business of constructing tankers for many decades and can be trusted with a large project of developing shore tanks of the class VLCC and ULCC for Iraq. The economic viability of constructing VLCC shore tanks can be estimated from the fact that the number of VLCC shore tanks that make shipments from Iraq has become more than doubled in the period from 2002 to 2012 (The Oil Exchange, 2013). Construction of VLCC shore tanks is also justified because of the fact that they are the most economical tankers for long range distances. Besides, the proposed new establishment can give a tough competition to SKA Energy by drawing upon its shortcomings. To store Class II products, four 50,000cum above ground tanks are needed and 25,000 sqm of warehousing and lay down is required to install the oil & gas and pipe equipment (SKA Group, 2014). To monitor the quality of operations, a fuel testing lab of international standard is required. A fleet of advanced trucks of fuel delivery are needed to adhere to the high safety standards of oil & gas. In addition to that, IDEX Group Terminal Management Systems and Endress & Hauser Radar Gauging system are required. New shore tanks will be a good addition to the existing setup of oil storage in Iraqi shoreline. The proposed new establishment will be equipped with these and more requirements like these to yield optimal profitability and benefit both for the company and the country at large. Construction of shore tanks will be a highly profitable investment in that it will serve as a means to ensure the transfer of correct amount of product using the marine surveyor and will also be useable for the inspectors or surveyors to obtain product samples for laboratory analysis so that the end product adheres to the specifications of purity. Petroleum products serve as a highly valuable asset and are the backbone of both the economy and security of any country (Lubin, 2011). Installing shore tanks will facilitate the marine transfer operations at the marine terminals in Basrah, Iraq. They will serve as an important link in the supply chain among the barges and the tanker ships that are responsible for transporting the waterways commodities. Bibliography “Fuel Storage,” SKA Group, 2014, http://www.ska-arabia.com/skalive/fuel/fuel-storage. “Iraq,” n.d., http://atlas.media.mit.edu/profile/country/irq/. “Japan,” eia, 2014, http://www.eia.gov/countries/cab.cfm?fips=ja. Lubin, Gus, “A Brief Tour Of The 7 Oil Chokepoints That Are Crucial To The World Economy,” Business Insider, 2011, http://www.businessinsider.com/oil-chokepoints-suez-canal-2011-1?op=1. Matt, “World’s untested assumption on 6 mb/d Iraqi oil by 2020,” Crude Oil Pak, 2014, http://crudeoilpeak.info/worlds-untested-assumption-on-6-mbd-iraqi-oil-by-2020. Morse, E. L. et al, “Energy 2020: Independence Day,” 2013, http://www.imd.org/uupload/webToolWWW/5345/Document/Citi_ENERGY%202020_Independence%20Day_2013-Feb.pdf. “SKA: How to succeed doing a difficult job in a difficult place,” ska-arabia.com, n.d., http://www.ska-arabia.com/skalive/phocadownload/SKA_page_v4.pdf. “Iraq Oil Infographic,” The Oil Exchange, 2013, http://theoilexchange.wordpress.com/tag/vlcc/. Read More