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Djibouti’s Red Sea Bunkering set to launch new floating storage facility

Written by Ian Taylor, Published: 16 February 2021

Speaking at Petrospot’s Maritime Week Africa online conference, Red Sea Bunkering’s General Manager Abdi Ismail Kahin announced that the company will be using an 80,000 DWT tanker to provide floating storage for bunkering operations in Djibouti.

The facility is scheduled to be in operation by the end of March. Kahin said that when it comes online: ‘Red Sea Bunkering will be the sole company in the region with such an asset. This new hub will create new storage, trading and supply opportunities for Djibouti and in the region.’

Kahin said that the tanker was part of Red Sea Bunkering’s mission to transform Djibouti into an ‘international bunkering hub’ once again. He reminded Maritime Week Africa delegates that Djibouti had previously been an important bunkering centre for ships transiting the Suez Canal – but then ‘due to the closure of the Suez Canal between 1967 and 1975 the bunker business also shut down, and new ship route around the Cape open up’.

Red Sea Bunkering’s plans for growth will also be bolstered by the agreement between its parent company Great Horn Investment Holding (GHIH) and China Marine Bunkering Co. CHIMBUSCO) to build a floating oil refinery at the Djibouti Damerjog Industrial Park. Kahin said that the refinery will produce six million tonnes a year of very low sulphur fuel oil (VLSFO) which ‘will be in line with the new International Maritime Organization (IMO) standard’.

Having such a large supply of VLSFO to hand, said Kahin, will provide ‘another great opportunity to strengthen the position of Red Sea Bunkering in the market and to meet the goal of making Djibouti the biggest bunkering hub at Bab el-Mandeb’.

The new floating storage facility and the VLSFO-producing refinery are likely to bring a step change for Red Sea Bunkering’s supply operations – but Kahin said that the company has already made significant progress in become a ‘one-stop shop physical supplier’, making truck deliveries by truck at the country’s ports and operating barges offshore and at anchorage.

‘Between mid 2015 and 2020, Red Sea Bunkering has supplied fuel oil and gasoil to over 5,000 vessels,’ said Kahin. ‘In a very short time, Red Sea Bunkering has brought back Djibouti as a leader on bunker map in the region

https://www.bunkerspot.com/africa/52480 ... e-facility

China Consolidates Its Commercial Foothold in Djibouti


(View of Djibouti City, the capital of Djibouti)

Chinese firms see Djiboutias a major transshipment hub a nda keyto unlockingthe economies of the Horn of Africa—most notably, landlocked Ethiopia.The managing director of the leading Chinese firm in Djibouti, China Merchants Port Holdings Company Ltd.(CMPort), explains this vision, noting that Djibouti “ is very close to the major Asia-Europe shipping route and is an important gateway port for the hinterland countries within the region.”20Together with the China Export Import Bank (EximBank), CMPort and its parent company, the central state-owned enterprise (SOE) China Merchants Group (CMG), have establisheda platform of finance, infrastructure, and trade that enablesmany Chinese firms to pursue business in a once unappealing economic environment

With an estimated $15 billion total Chinese investment in development of the port and its hinterlands, China is the largest external commercial player in Djibouti. Therelatively large PRC commercial presence reflects, at least in part, Western absence. Western analystshave repeatedly questioned the feasibility of the Djiboutian government’s proposed infrastructure projects, and expressed concerns about its large governmentdebt load. China, by contrast, has not balked at the financial risk inherent in investing in Djibouti and has fast become the nation’s principal economic partner and creditor. Djibouti’s president, Ismail Omar Guelleh, said in April 2017 that, “no one but the Chinese offers a long-term partnership in Djibouti.” China-Djibouti relations were upgraded to a “Comprehensive Strategic Partnership” when Guelleh visited China in November that year.

Djiboutian authorities hope the partnership with the PRC will transform Djibouti into the “Singapore”or “Dubai of East Africa. The CMG President touted his firm’s success in Guangdong as a “template for development in Djibouti,” where they seek to leverage the “transformative power of ports.” This transformation entails building transport infrastructure, industrial parks, free trade and export processing zones, and developing commercial services and residential areas adjacent to the port. CMPort markets this style of comprehensive development as the “Shekou Model”(蛇口模式) This business model derives its name and inspiration from Shekou, once a tiny fishing village in China’s Guangdong Province. CMG developed a seaport and export processing zone there in the early 1980s, propelling neighboring Shenzhen’s growth into a world-class commercial, financial, and industrial hub.The firm is now promoting this model in the small east African nation of Djibouti. The core of this effort is a cluster of ports and associated railway, pipeline, and road infrastructure that are designed to “make Djibouti the Shekou of East Africa—for regional shipping, logistics, and trade,” in the words of CMG President Li Xiaopeng

This phased development model is alsodescribed in shorthandasa “port-park-city” model (前港, 中区, 后城). This signature CM Gapproach to port development is designed to facilitate not just the transportation of goods, but to foster a wider business ecosystem that supports broader development. By clustering industrial, logistics, and business service facilities adjacent to the port of Djibouti, Chinese firms hope to replicate the extraordinary success of Shenzhen. The CMPort managing director calls attention to his firm’s “past the pier” development efforts that “are not limited to ports but [includean] international free trade zone and urban development called the Shekou ‘port-park-city’comprehensive development model

Djiboutian authorities are enthusiastic about the “innovative model implemented by China Merchants”and quite naturally seek the same extraordinary growth. Yet Djibouti manifestly lacks most of the advantages enjoyed by Shenzhen. The Shekou port complex on Shenzhen’s western periphery is nested among the massive population centers of Hong Kong and Guangzhou. It sits in the heart of the Pearl River Delta, the commercially vibrant zone at the center of the PRC export miracle, where it enjoys the benefits of a massive labor pool, productive export-facing industries, and growth-oriented, technocratic governance. These benefits are largely unavailable on the Horn of Africa. Still, Djibouti is a vital gateway to a large part of the African continent with a rapidly expanding population, which may be poised to develop robustly with sound investment and economic planning. What Djibouti lacks in terms of pre-existing economic development may be partially compensated for by serving as an especially important ocean access hub for the Horn of Africa.