Adnoc inks deal for world's largest underground oil storage project

Engineering, procurement and construction contract awarded to South Korean firm for Adnoc Fujairah Underground Storage
Adnoc inks deal for world's largest underground oil storage project
Dr Sultan Ahmed Al Jaber, UAE Minister of State and Adnoc Group CEO.
By Sam Bridge
Wed 27 Feb 2019 02:37 PM

Abu Dhabi National Oil Company (Adnoc) announced on Wednesday that it is building the world’s largest single underground project ever awarded for oil storage, with a capacity of 42 million barrels of crude oil, in Fujairah.

An engineering, procurement and construction (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 AED4.4 billion ($1.21 billion) with approximately 50 percent of the contract spend feeding back into the UAE economy through Adnoc’s In-Country Value program.

Adnoc said the Fujairah Underground Storage will strengthen the UAE's position as a reliable supplier of crude oil.

An agreement to announce the mega-project was signed in the presence of Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and President Moon Jae-in, President of the Republic of Korea in Seoul. The agreement was signed by Dr Sultan Ahmed Al Jaber, UAE Minister of State and Adnoc Group CEO, and Jae Hyun Ahn, Skec president and CEO.

Al Jaber said: “Construction of the world’s largest single underground project ever awarded for oil storage will enhance the UAE’s energy security.

“This project is a testament to the strong strategic partnership between UAE and South Korea and to the capability of SK Engineering and Construction Co Ltd, given the scale, sophistication and value of this construction.”

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 able to store three different types of crude oil, providing ADNOC with increased flexibility to export crude through Fujairah’s Arabian Sea oil terminal.

In November, Adnoc signed a memorandum of understanding with Indian Strategic Petroleum Reserves Ltd to explore storing Adnoc crude oil at its underground storage facility at Padur in Karnataka, India.

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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