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Bunker supply firm Aegean Marine Petroleum S.A. has revealed that it expects to start the commercial operation of its Fujairah onshore storage facility in the first quarter of 2014.

The fuel oil tank farm, which is being constructed by Quality International Co. Ltd., will have a total storage capacity of 465,000 cubic metres.

In a conference call yesterday, August 20, to discuss Aegean's second quarter 2013 results, E. Nikolas (Nick) Tavlarios [pictured], President and CEO, said the company had executed a $73.5 million senior secured term loan to fund construction of the Fujairah facility, and stressed that its storage facilities would support Aegean's growth and expansion into the future.

Tavlarios also gave an insight into the company's storage strategy moving forward, saying: "With the upcoming completion of the Fujairah onshore storage terminal, we will commence the sales process to monetize our floating facility in this location. Our goal is to continue to utilize our onshore storage capacity significantly as we work toward further reducing our floating storage capacity worldwide.

"The elimination of floating storage facilities has become a growing trend around the world. At Fujairah, we expect this policy to increase demand for onshore storage capacity and enhance the value of our new facility there.

"We expect to complete the facility before the end of 2013, commence utilization in early 2014. We're excited to capitalize on the emerging opportunities in the region."

Commenting on the company's older vessels, Tavlarios said: "We will continue to examine opportunities to increase our efficiencies to additional sales of older vessels and other non-core assets."

A key element of the Aegean's second quarter results was that the company managed to reduce operating expenses by $4.2 million, or 6.9%, to $56.3 million, compared to $60.5 million during the second quarter of last year. Douglas Mavrinac, Managing Director at global investment banking firm Jefferies, asked the question: "The scale of your business is getting very large and you guys are becoming very, very efficient. Does it reach a point where you can’t go any lower, or are you always looking for opportunities to continue to remain as efficient as possible?"

In reply to the question, Tavlarios said: "We’re definitely looking to offload one of our floating storage facilities when the Fujairah onshore storage facility comes online and we do have around one to two bunkering tankers, perhaps over time…"

In answer to a question from William Horner, Associate Equity Analyst at BB&T Capital Markets, regarding the level of interest in Fujairah from potential customers in terms of either targeted lease capacity or potential spot business, Tavlarios said: "We are actually beginning to approach the market right now and speak to long-term users along with ourselves. By the way, we will be one of the significant users in the storage facility. So there is that locked-in kind of capacity if you will, right on that plan. But it's definitely there. There is particularly a demand for fuel oil in the area. So, we are excited about the opportunities."

Aegean's CEO also said during the discussion that the company was looking at the possibility of launching a new bunker supply operation in an additional port within the next few months. "In addition to this year's facility, we continue to explore opportunities to open an additional port in 2013 or early 2014," Tavlarios remarked.