UAE-based Gulf Petrochem plans to focus on East Africa for growth and is increasing its storage capacity in the region to take advantage of double digit growth for some products, executive director S Thangapandian said.

The oil product trader company also plans to strengthen its presence in the Middle East, and is spending $60 million to boost its storage at Fujairah.

Gulf Petrochem, whose main trading activities are in fuel oil and bunkering, started talks about three months ago to take up storage capacity in Dar es Salaam in Tanzania and Mombasa in Kenya, Thangapandian said in an interview.

A deal to lease storage of about 100,000 cubic metres to store mainly gasoil and gasoline in East Africa is expected to be finalised by December, while the company also plans to tap the bunker fuel and liquefied petroleum gas (LPG) sectors.

"Next decade belongs to Africa because that's the market which is short. Tremendous opportunities are available there and assets are available at cheap rates ... things are slowly stabilizing there," Thangapandian said in an interview during the Asia Pacific Petroleum Conference in Singapore.

African demand for gasoil and gasoline is increasing at 7-8 per cent, while LPG demand is rising in double digits, he said.

Industrial expansion and a growing fleet of automobiles in a region that lacks refining capacity are key reasons that have stoked East African appetite for oil product imports.

Gulf Petrochem has already applied for licenses in Kenya and Tanzania to market LPG, used mainly for cooking, while taking baby steps to increase the number of its fuel stations to 8 from the current 3.

Outside East Africa, Gulf Petrochem will spend $60 million to add up to 270,000 cubic metres of capacity in Fujairah to its existing 412,000 cubic metres.

Part of the capacity would be ready by December 2016, with the remainder completed by March 2017, Thangapandian said.

Gulf Petrochem, which has leased floating storage in Tanjung Pelepas in Johor, Malaysia, expects its fuel oil trading volumes to rise, he added.

It is currently trading about 2.5 million tonnes of fuel oil a year, most of which are of the 380-centistoke grade.

"We have been growing at 50-60 per cent year-on-year. We hope we will be able to continue the same trend for the next two to three years," he said, referring to fuel oil trading. – Reuters