South Korea’s Ulsan Port Authority is in talks with various foreign strategic investors to advance Phase I of its North East Asia Oil Hub Project, UPA President Jong Yeol Kang told S&P Global Platts in an interview.

The port of Ulsan is the world’s fourth largest liquid handling port, dealing with almost 200 million mt of cargo in a year, of which about 80% is liquid bulk. It currently houses 11 commercial tank terminals and has a storage capacity of 23 million barrels.

The project — which comprises two phases and is being planned at Ulsan port — once fully complete by 2025, is set to more than double Ulsan’s commercial liquid storage capacity and will not only fulfill South Korea’s energy security requirements but will also cater to rising oil demand in the North East Asian region.

“The first phase of the project known as North Port, is estimated to have a [storage] capacity of 9.9 million barrels across 302,000 square meters, and will mostly store clean petroleum products,” Kang said.

Construction of the North Port phase is expected to be completed by 2019,” he added.

The second phase called South Port will have a [storage] capacity of 18.5 million barrels and will mainly store crude oil and dirty petroleum products including bunker fuel oil, he said.

“The reclamation of land [under North Port] has been completed by us. We invested about $10 million to achieve that,” Kang said, adding that the capex of Phase I is estimated at around $600 million.

“Our upper level tank terminal investors will consist of both financial investors and firms with operational-side experience,” he said.

“We are targeting to build tank terminals [under North Port] either within this year or by the start of next year,” Kang said. “Once that happens, we will release the port infrastructure outline and plan for the second phase and gather investors for it at the same time,” he said.

COMPLIANCE TO IMO SULFUR CAP A PRIORITY

Besides strengthening its storage infrastructure, the Ulsan Port Authority is also eying LNG bunkering.

LNG as a marine fuel is gaining importance due to stricter environmental regulations and ports that don’t respond to the change may be left behind, Kang said.

“We are looking at LNG bunkering at both the international and domestic level,” Kang said.

Last year, the Ulsan Port Authority became part of an international focus group that was initially formed in 2014 by Singapore, Rotterdam, Antwerp and Zeebrugge.

Since 2014, the group expanded to include the Port of Jacksonville, the Norwegian Maritime Authority, the Ministry of Land, Infrastructure, Transport and Tourism of Japan, and the Ulsan Port Authority, Republic of Korea. The collaboration is intended to deepen cooperation and information sharing in relation to LNG bunkering.

“Korea’s Ministry of Maritime Affairs and Fisheries is also conducting a feasibility study currently, to select a LNG bunkering hub for commercial vessels. Once the study is finished, a port will be designated as a LNG bunkering hub and hopefully it will be Ulsan,” Kang said.

“A decision is expected by the second quarter of next year.”

Also, high on the port’s agenda is its commitment to enforce the International Maritime Organization’s global sulfur cap, which starts from January 1, 2020.

“We will definitely have more inspectors dispatched once the IMO regulation is up and running,” he said.

“We are working closely with the Ministry of Maritime Affairs and Fisheries. They are the main organization who will ensure compliance to this regulation and we will also support.”

MASS FLOW METERS BEING ASSESSED

From January 1, Singapore became the only port in the world to mandate the use of mass flow meters for fuel oil deliveries. MFMs measure the flow rate in the pipe, gauging the quantity as well as the mass and density of the bunker fuel passing through.

“We are monitoring its success in Singapore and evaluating if we want to adopt this system,” Kang said.

“Currently, Ulsan is not a bunkering hub but if it helps to increase liquidity and throughput at our port, we can consider various options,” he said.

Ulsan’s bunker sales are about 1.3 million kiloliters/year, he said.

Source: Platts