$1.2B UAE Oil Storage Contract Goes to SKEC

$1.2B UAE Oil Storage Contract Goes to SKEC
SKEC is building the underground storage complex in hard rock in the Emirate of Fujairah.

Abu Dhabi National Oil Co. (ADNOC) reported Wednesday that it has awarded South Korea’s SK Engineering and Construction Co. Ltd. (SKEC) an AED 4.4 billion (US$ 1.21 billion) contract to build the world’s largest single underground crude oil storage project.

According to ADNOC, the 42 million barrel (bbl)-capacity complex will comprise three 14 million-bbl underground storage caverns in the Emirate of Fujairah on the UAE’s eastern coast. The company stated that the ADNOC Fujairah Underground Storage facility will be capable of storing three different types of crude oil and will facilitate exports through Fujairah’s Arabian Sea oil terminal.

In addition to elevating the UAE’s profile as a crude oil supplier, the storage facility will enable ADNOC to manage and optimize its delivery schedule and support its broader move into trading as Fujairah grows into a global oil and products storage hub, the company noted.

“Construction of the world’s largest single underground project ever awarded for oil storage will enhance the UAE’s energy security, in line with the wise guidance of the country’s leadership,” Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, said in a written statement emailed to Rigzone. “Importantly, developing this strategic oil storage mega facility in Fujairah will also support and further enable our broader trading ambitions, strengthening our ability to respond efficiently and competitively to the needs of our customers, while also providing ADNOC with greater flexibility to proactively respond to market needs and commercial opportunities.”

The first phase of the project, construction of an access tunnel, began in 2018 and has already concluded, ADNOC stated. The company anticipates the complex to be complete in 2022.

“We are progressing well in our project with ADNOC in the world’s largest single storage facility in hard rock, located in Fujairah,” noted Jae Hyun An, CEO of SKEC. “SKEC is committed to providing high quality services as well as supporting the local UAE economy as we grow our expertise in global energy storage.”


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