China Aviation Oil (CAO), Asia's biggest jet fuel buyer, has terminated its plan to build and manage an oil storage terminal in Malaysia, the company said.
In October last year, CAO formed a joint venture with Centralised Terminals, a Malaysian company owned by shipping firm MISC and Dialog Group, to build a 380,000 cubic metre (2.39 million barrels) storage tank terminal in southern Johor state's Tanjung Langsat Port.
It had planned to build and lease all the tankage to store middle distillates and fuel oil for at least seven years once the storage was ready by end-2013.
CAO and Centralised Terminals have decided mutually to terminate the shareholders agreement as certain key conditions would require a much longer time to be met than initially thought, CAO said in a statement without elaborating on the conditions.
"As (the storage) facility is a greenfield project which would have taken about two years to complete, the cessation of this project will not have any material impact on the current and future businesses or earnings of the CAO Group," chief executive of CAO Meng Fanqiu said in the statement issued last Friday.
"We have stepped up efforts to evaluate several opportunities to lease or invest in oil storage facilities in the greater Singapore region."
CAO recently acquired storage space in Singapore and South Korea as part of its four-year plan of global expansion into new outlets, which has led it to search for storage assets to feed into the outlets.
The company imports more than 95 percent of China's jet fuel needs, accounting for about 40 percent of the country's total demand. Its major customers include the nation's three biggest international airports.