Hong Kong-listed Agritrade Resources, which mainly engages in the coal trading business between China and Indonesia, is looking to expand its oil storage business as well as its fleet.
Agritrade Resources said it has been in active discussion and negotiation with major oil trading companies in relation to term storage contracts for its oil storage business which will secure stable cashflows for the group and provide prospects for fleet expansion, so as to capture opportunities in the energy sector brought by the rapid growth of Southeast Asia.
The company acquired a VLCC at an investment cost of $22m in February this year and entered in to a floating storage unit service agreement with Singapore trading firm Glencore to lease out the whole capacity of the VLCC for Glencore’s storage of crude oil for six month at $6.4m with an option to extend for another six months.
The group believes that the drop in crude oil price will encourage stockpiling of crude oil and reduced bunker prices will positively affect tanker earnings by lowering voyage operating costs.
Agritrade Resources is the owner and operator of PT Senemas Energindo Mineral, a 2,000-hectare coal mine in central Kalimantan, Indonesia.