Oman Oil Trader Seeks U.S., Africa Footholds in Growth Push

Oman, the largest oil producer in the Middle East outside of OPEC, plans to buy, lease or build fuel-storage tanks in East Africa to boost sales on the continent and open a U.S. office to trade refined products and Latin American crude.

Oman Trading International Ltd. intends to invest less than $50 million in facilities to store fuel in Mozambique or Tanzania to help supply markets in Africa’s landlocked interior, Chief Executive Officer Talal Al Awfi said in an interview Sunday at his office in Dubai. He declined to specify the target markets. His company, a joint venture with Vitol Group, the world’s largest independent energy trader, plans to open a U.S. office in the first half of 2016.

Infrastructure investments in Africa and a physical presence in the U.S. are vital for the company to extend its reach beyond traditional markets in Asia, Al Awfi said. Oman sells most of its oil to China, where Middle Eastern crude producers face growing competition from suppliers outside the Organization of Petroleum Exporting Countries. Russia surpassed Saudi Arabia to become China’s top supplier in May, according to data from the Beijing-based General Administration of Customs.

“We’ve seen fundamental changes in the market,” Al Awfi said. “Asia as a market is now enjoying a period where there are options with all the growth in oil production.”

Brent for August settlement slid 0.1 percent to $61.93 a barrel on the London-based ICE Futures Europe exchange at 12:04 p.m. Singapore time Tuesday.

U.S. Office

An office in the U.S. will give Oman Trading a base to buy and sell Latin American crude, he said. Exports from Colombia and Venezuela, among other regional suppliers, have been pushed out of the U.S. market by increased local production, and many of those barrels are now flowing to Asia, where Middle Eastern crudes were traditionally dominant, he said.

In Singapore, the company hired Nick Kay, a former trader at Phibro Ltd., to expand its crude oil business, Al Awfi said. Kay will be the company’s first crude trader based in the Singapore office, which has so far dealt in petrochemical products.

Oman pumped 944,000 barrels of oil a day in 2014, according to the country’s central bank. OPEC’s output target is 30 million barrels a day. Oman Trading, based in Dubai in the United Arab Emirates, handles about 160,000 barrels of crude a day and about 40,000 barrels a day of refined products, according to its website.

Oman Trading is seeking storage capacity in Africa for up to 100 million cubic meters (26 billion gallons) of refined products, and it plans to complete a transaction before the end of the year, Al Awfi said. The company also sees an opportunity to expand trading in Iraq, where it supplies gasoline, he said.

Stake Sale

The Sultanate of Oman, which owns 70 percent of Oman Trading, plans to buy the 30 percent stake in the company held by Vitol, people familiar with the situation said earlier this month.

The government had always intended to take full control of Oman Trading since founding the business in 2006, Al Awfi said. He wasn’t able to comment further on the planned ownership change because Oman Trading’s management isn’t directly involved, he said.

Oman is a founding shareholder of the Dubai Mercantile Exchange, a futures market set up in 2007 to trade Omani crude. CME Group Inc. owns 50 percent of the exchange, and Oman and Dubai hold smaller stakes.