ADNOC is building the world's largest underground oil storage project, with a capacity of 42mn barrels of crude oil, in UAE emirate Fujairah, a global industry storage and trading hub. It awarded a $1.21bn engineering, procurement and construction (EPC) contract to South Korea's SK Engineering and Construction Co (SKEC) for the project.
SKEC will construct three underground storage caverns, each with a capacity of 14mn barrels, deep below ground level.
“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," ADNOC Group CEO Dr. Sultan Al Jaber said.
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 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 program. ADNOC says up to $600mn (50%) of the contract spend will feed back into the UAE economy through ADNOC’s In-Country Value program.
In November, ADNOC signed a memorandum of understanding 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 6.29mn 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.
In the upstream, Korea’s GS Energy was awarded a 3% stake in the ADNOC Onshore concession in May 2015, while Korea National Oil Corporation (KNOC) and GS Energy hold a 40% stake in the Al Dhafra Petroleum concession area, where first crude oil production is expected in 2019.