Brooge Energy sublets Fujairah site

Brooge Energy Ltd,a midstream oil storage and service provider located outside the Strait of Hormuz, said it has refinery agreement with an oil trading company for a 25,000 bpd modular refinery.

The company said it will sublease the land to an oil trading company that will construct the refinery “bearing” all the costs of construction.

BPGIC will become responsible for operating of the refinery once the construction is complete.

“The modular refinery will be focused on producing Very Low Sulphur Fuel Oil (“VLSFO”) and will be fully compliant with the new IMO 2020 very low Sulphur rule,” said Nicolaas L. Paardenkooper, CEO of Brooge Energy and BPGIC in a statement.

The agreement between both entities includes a 20 years tolling contract; which consists of a five year contract that starts upon completing the refinery construction, subject to three renewal periods of five years each.

“This agreement is a low-risk approach to advancing these plans as the oil trading partner will own the asset and take on the cost of construction and any oil price risk, while our focus remains in our area of expertise as the operator of the facility. This is expected to drive additional revenue to Brooge Energy, at favorable EBITDA margins,” he added.