A visualisation of the proposed LPG terminal to be built in Port Klang in Malaysia. Credit: GPS Group.

Norwegian oil and gas firm Equinor has signed an agreement to collaborate with storage and logistics provider Global Petro Storage (GPS) to establish a terminal and storage facility for liquefied petroleum gas (LPG) in Port Klang, Malaysia.

Under the terms of the agreement, GPS will build a new 135,000m³ facility that can handle 1.5Mtpa of LPG and will exclusively provide storage services to Equinor.

Work on the facility is expected to commence next January with operations starting in mid-2021.

According to GPS, the terminal will have the ability to handle very large gas carriers (VLGC) and pressurised LPG vessels on its jetty.

“The terminal and storage are also strategically located for blending and selling to other growing markets in the region.”

Equinor will bring LPG from multiple regions such as the North Sea and North Africa to the terminal at Port Klang to sell in Malaysia and other Asian markets, including Bangladesh, the Philippines, India, Indonesia and Vietnam.

The proposed terminal will allow the company to increase its market share in the LPG segment in South-East Asia.

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Equinor currently accounts for nearly 10% of the global waterborne LPG volumes.

Equinor products and liquids vice-president Molly Morris said: “Malaysia is an attractive market and we believe that we will be a competitive supplier to the wholesalers of LPG into the domestic market. The terminal and storage are also strategically located for blending and selling to other growing markets in the region.

“We will source LPG from the North Sea, North Africa, the Middle East and Australia and utilise the opportunities the terminal and storage and our shipping positions give us to create value and strengthen our competitiveness.”

LPG offers an environmental-friendly alternative and is used for transport and industrial purposes, as well as cooking, hot water systems and heating.

The structure of the agreement allows Equinor to have an option to acquire an ownership interest in the new storage and terminal, where it will have sole user rights.

The percentage of the stake to be offered under the option and the financial details of the agreement were not disclosed.