ADNOC and SKEC are to build world’s largest single underground project ever awarded for oil storage, with a capacity of 42 million barrels of crude oil, in the Emirate of Fujairah on the eastern coast of the United Arab Emirates.

An EPC contract has been awarded to South Korea’s SK Engineering and Construction Co. Ltd (SKEC) to construct the three underground storage caverns, each with a capacity of 14 million barrels, deep below ground level. The EPC contract is the largest for a single project award for underground crude oil storage in the world and is valued at AED 4.4 billion ($1.21bn) with approximately 50 per cent of the contract spend feeding back into the UAE economy through ADNOC’s In-Country Value program.

The ADNOC Fujairah Underground Storage will strengthen the UAE’s position as a reliable supplier of crude oil as well as give ADNOC greater flexibility, allowing it to manage and optimise its delivery schedule and support its broader move into trading. It will also enhance its position as one of the key trading and supply partners in Fujairah’s growth as a global oil and products storage and trading hub.

Works commenced in 2018 and the first phase of the ADNOC Fujairah Underground Storage, involving the construction of an access tunnel, has been completed.

When complete in 2022, the ADNOC Fujairah Underground Storage will be one of the largest facilities of its kind in the world and able to store three different types of crude oil, providing ADNOC with increased flexibility to export crude through Fujairah’s Arabian Sea oil terminal.

The EPC contract award followed a robust tendering process that included a rigorous assessment of how much of the contract value would support the growth and diversification of the UAE’s domestic economy through ADNOC’s In-Country Value programme.

With as much as AED 2.2 billion ($600m) expected to flow back into the UAE’s economy, the contract will give a significant stimulus to the country’s products and services, manufacturing and assembly and infrastructure sectors, as well as creating additional employment for UAE nationals.

In November, ADNOC signed a MoU with Indian Strategic Petroleum Reserves Ltd (ISPRL) to explore storing ADNOC crude oil at ISPRL’s underground storage facility at Padur in Karnataka, India. This agreement followed the arrival of the final shipment of the initial delivery of ADNOC crude to be stored in another ISPRL underground facility in Mangalore, earlier the same month.

ADNOC also stores up to 6.29 million barrels of crude oil at the Kiire oil terminal in Kagoshima, southern Japan, under an agreement with Japan’s Ministry of Economy, Trade and Industry.

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28th February 2019