China Aviation Oil to invest in Malaysian greenfield oil storage terminal

Johor terminal with total storage capacity of 380,000m3 to be built specifically for CAO’s use.

China Aviation Oil (Singapore) Corporation Ltd (“CAO”), the largest physical jet fuel trader in the Asia Pacific region, is pleased to announce that it has entered into a joint venture with a Malaysian company, Centralised Terminals Sdn Bhd (“CTSB”) to construct, develop and operate an oil storage terminal for jet fuel, gasoil and fuel oil located at the Port of Tanjung Langsat, Johor, Malaysia (“Terminal Three Facility”).

Terminal Three Facility is located 32 nautical miles from Singapore Changi International Airport and 42 nautical miles from Jurong Island. CAO will acquire a 26% equity stake in Langsat Terminal (Three) Sdn Bhd (“Langsat Three”), a special purpose vehicle to be established by CTSB in Malaysia to develop, manage, operate and maintain Terminal Three Facility, with a total storage capacity of 380,000m3 on 21.905 acres of land.

CTSB will own the remaining 74% equity stake in Langsat Three. Based on estimated total cost of investment of RM370 million (or US$127 million) and debt to equity ratio of 70:30 for the Terminal Three Facility, CAO’s equity investment amount is approximately RM29 million (or US$10 million) over the next two years. The Tanjung Langsat Port Sdn Bdn will construct two new berths to provide access to Terminal Three Facility.

The construction of Terminal Three Facility is expected to commence by the end of this year and is expected to complete by 2013.

Mr Meng Fanqiu, Chief Executive Officer of CAO said, “Having access to storage facilities in the greater Singapore region (i.e. Singapore, Malaysia and Indonesia) is fundamental to CAO’s oil trading business. Given the current limited access to storage facilities in the greater Singapore region and considering the attractive geographical location of Terminal Three Facility and that this storage terminal will be developed for the exclusive use of CAO, the strategic value of this investment is high to CAO.”

“Not only is this investment expected to provide CAO with a steady stream of income, it is also highly synergetic to CAO’s jet fuel trading business. In addition, this investment will provide a platform for CAO to expand its gasoil and fuel oil trading businesses,” added Mr Meng in a CAO report.

Datuk Nasarudin Md Idris, Chairman of CTSB said, “CTSB is happy to establish a strategic partnership with CAO for the construction and management of its third oil storage terminal at Tanjung Langsat. We look forward to a mutually beneficial partnership.”