Abu Dhabi National Oil Company is to start building an oil products import terminal in Sharjah in June, industry sources said, to help meet demand for power and vehicle fuel in the poorer northern parts of the UAE.
Drivers in the northern emirates, many of whom have long suffered from mid-summer power cuts thanks to fuel shortages, have faced long queues to fill up at ADNOC's gleaming gas stations since Dubai-based ENOC pulled out last June.
Ten months on, the cordonned off ENOC forcourts lining the streets of Sharjah are covered with a thick layer of dust.
But ADNOC, which can sell fuel below international prices thanks to its big upstream business in Abu Dhabi, is to build a fuel import terminal in the port of Hamriyah over the next two years to meet strong demand in northern parts of the country.
"ADNOC is supplying the power stations in the northern emirates but currently they're supplying via trucks from Jebel Ali," a Hamriyah shipping industry source said.
"Once they have their facility here it will be easier. Hamriyah port has easy access to all of the northern emirates. They will supply to power stations and pump stations."
ADNOC has been trucking fuel from the port to the southeast of Dubai to power plants in the poorer northern parts of the UAE for years and a Gulf terminal offers a convenient bypass around busy Dubai.
ADNOC has appointed Abu Dhabi Oil Refining Company (TAKREER) to build the terminal in Sharjah's Hamriyah free zone that will include oil storage tanks and a jetty for oil products.
China's Sinopec has been awarded one engineering procurement construction (EPC) contract for the project, which includes building a terminal with 12 storage tanks capable of holding 241,000 cubic metres of fuel in total.
A Takreer official said Sinopec was expected to start work within two months and that the project should be completed and handed over to owner ADNOC Distribution by end-2014.
Dubai government-owned ENOC had been operating at a loss for years due low fixed retail prices in the UAE and the rising cost of gasoline it has to buy on the international market to meet domestic demand.
Fuel retailer ENOC in July denied reports of ADNOC taking over its petrol stations in the northern emirates.
ADNOC has been largely unaffected thanks to its hold over most of the UAE's vast oil reserves. ADNOC operates nearly 194 petrol stations, including 135 in Abu Dhabi.
The company is planning to set up 234 new petrol stations across the UAE by the end-2012, according to local media reports.
Hamriyah is a small port with an oil storage capacity of just over 340,000 cubic metres which is mainly used by vessels loading and offloading lubricants, oil products and base oils.
Greece-based Archirodon Construction, which has undertaken many marine and jetty projects in the UAE, Qatar and Saudi Arabia, was awarded a second EPC contract to build a jetty.
"Right now it's in the design phase and I think some time around the middle of June the construction will start," an industry source with direct knowledge of the project said.