KUALA LUMPUR (Nov 3): Dialog Group Bhd (KL:DIALOG) is expanding its storage terminal in Tanjung Langsat, Johor with engineering and construction works set to begin immediately.

The plan is to add 100,000 cubic metres by mid-2029, increasing total storage capacity to 1.1 million cubic metres, Dialog said in an exchange filing. The project will cost up to RM200 million and carries a high single-digit internal rate of return, according to Public Investment Bank.

“We view the expansion positively as it broadens Dialog’s recurring income base while utilising existing marine facilities,” the house said.

The expansion at the Langsat 3 terminal builds on the earlier 150,000-cubic-metre expansion, which commenced operations in September and is fully contracted, including 100,000 cubic metres dedicated to Hong Kong renewable fuel firm EcoCeres under a take-or-pay arrangement.

All in all, Dialog has nearly six million cubic metres of operating storage capacity, making it the second-largest terminal owner-operator in Southeast Asia.

“We expect the new capacity to achieve high utilisation of above 90% following commissioning, supported by regional storage demand, while geopolitical uncertainties could reinforce customers’ need for supply and logistics flexibility,” Public Investment said.

However, the Tanjung Langsat terminal site is almost fully developed, suggesting limited room for further capacity additions after the latest phase, the house noted.