Abu Dhabi's $13 Billion of Investments Back Malaysia as Regional Oil Hub

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Malaysia is making major moves to implement its strategy to develop into a regional oil and gas hub. President Najib Razak signed a $7 billion deal with the visiting Sheikh Mohammed bin Zayed, crown prince of Abu Dhabi, in Kula Lumpur this week.

The deal will drive the construction of a $6.75 billion oil storage facility in Tanjung Piai, Johor state. The installation will have a storage capacity of 60 million barrels of oil. Storing oil in export markets gives Abu Dhabi greater leverage in marketing, as it allows for a quicker response to fluctuation in demand and the ability to supply the market with smaller batches than the typical 2 million barrels carried by oil tankers. Asia is the main destination for Abu Dhabi's oil, which feeds the region's energy growth. Oil storage capacity in target markets also increases the security of supply.

Last November, Abu Dhabi National Oil Company (Adnoc) signed a lease for 6 million barrels of storage capacity near the South Korean port of Yeosu.

Driven by continued growth, Asian demand for crude oil continues to boom. U.S. imports fell 2% in January from December, but OPEC reports that Chinese imports grew 6.2% to an average 5.9 million barrels per day. Abu Dhabi pumps an estimated 2.65 million barrels per day.

In another agreement, Abu Dhabi's Aaba Investments and state-owned 1Malaysia Development created a strategic partnership to invest $5.8 billion in Malaysia. Investments will focus on important high-impact projects vital to the long-term economic and social growth of Malaysia.

For related information, see October 30, 2012, article - Singapore Pessimistic on 2013 Prospects, but Malaysia Ready for Deals and Profits.

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