UAE midstream oil storage and service company Brooge Energy has reported a revenue of US$41.8 million (€35.5 million) for the year ending 31 December 2020, with a net income of US$17.2 million, compared to a loss of US$75.3 million in 2019.
Brooge operates from a site near the Port of Fujairah, outside the Strait of Hormuz, through its subsidiaries Brooge Petroleum and Gas Investment Company (BPGIC) and Brooge Petroleum and Gas Investment Company Phase III (BPGIC III). Revenue is slightly down on 2019 (US$44.1 million) due to a drop in ancillary revenue from US$20.1 million in 2019 to US$14.9 million in 2021. The company decided to diversify its customer base to minimise concentration risk and the five new customers have little or no ancillary service needs. Higher storage rates helped to offset this. Lower ancillary revenues also hit gross profits, which were down to US$28.9 million in 2020 from US$33.9 million in 2019. There were some increased staffing costs and finance costs.
‘In 2020, we continued to operate Phase I of our operational footprint at full capacity yielding favourable margins and profitability during the year. The midstream sector continues to be of significant strategic importance, supporting the infrastructure and storage needs of the oil industry and ultimately allowing the market to work more efficiently. During the year we were also able to complete the issuance of US$200 million in proceeds from a bond offering, part of which was used towards construction of Phase II,’ says Nicolaas L. Paardenkooper, CEO of Brooge Energy and BPGIC.
BPGIC signed a number of important contracts for Phase I in 2020 including three storage contracts covering a total of 129,000 m3 of storage, at a 50% premium to previous contracts, with three regional oil trading companies, and two further contracts, also with regional oil trading companies, for 104,074 m3 at a 60% premium. It also signed a storage contract with ‘one of the super major’ oil companies in the world.
In August 2020, the company began hydrotesting operations for its Phase II storage expansion to confirm tank integrity.
Phase III development continues. Brooge signed a land lease agreement with Fujairah Oil Industrial Zone for a plot of land with a total area of 450,000 m2 for the Phase III facility in February and engaged Ernst & Young to carry out the feasibility study. MUC Oil & Gas Engineering Consultancy issued the final basic design in July 2020, and Brooge began pre-construction work at the site in October 2020.
‘We expect Phase II construction to be completed in Q2 2021. Phase II is fully contracted and after completion, our storage capacity will be expanded by approximately 600,000 m3, which equates to 3.8 million bbl. This increases the total capacity of the BPGIC Terminals to approximately 1 million m3, or the equivalent of 6.3 million bbl. By this point, we will be the second largest non-captive storage operator in Fujairah,’ says Paardenkooper.
The company expects Phase II to be operating at or near full capacity by Q3 2021, and will commence construction for Phase III, which will expand capacity by up to 3.5 million m3.