China Petroleum & Chemical Corp (Sinopec) is leading fuel producers and traders borrowing more than US$500 million to build storage at the biggest oil port in the Persian Gulf region outside the Strait of Hormuz.
The Chinese company and a Singaporean partner raised a US$252 million loan last month for an oil-storage facility at Fujairah, the United Arab Emirates (UAE) port outside the Gulf's shipping chokepoint, said a person with knowledge of the financing.
The joint venture will pay less than the average of energy companies worldwide, according to data.
"Borrowers in industries with strong fundamentals like oil will not have problems raising money," said Amol Shitole, a credit analyst with SJS in Bangalore, India. "Syndicated loans and project financing are coming at cheaper cost" as lending rates fall, he said.
Fujairah's expansion as a fuel-storage site comes as credit costs decline in the UAE and the Gulf Co-operation Council's other five member nations. Borrowers in the region are paying the lowest interest rates since 2010, according to data for 209 GCC loans compiled by Bloomberg.
Storage operators may need to borrow more as they build new tanks in Fujairah.