Abu Dhabi state oil firm ADNOC has signed a deal with South Korea’s SK E&C to build the world’s largest underground oil storage facility, at a cost of Dhs4.4bn ($1.2bn), in the emirate of Fujairah.
Abu Dhabi Crown Prince Mohammed bin Zayed al-Nahyan said in a tweet on Wednesday the storage project would have a capacity of 42 million barrels.
“Developing this strategic oil storage mega facility.. will also support and further enable our broader trading ambitions, strengthening our ability to respond efficiently and competitively to the needs of our customers,” Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO said.
In January, ADNOC established a new trading venture with Italy’s ENI and Austria’s OMV that is expected to expand its trading markets.
When complete in 2022, the ADNOC Fujairah Underground Storage facility 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, ADNOC said.
The Engineering, Procurement and Construction (EPC) contract, awareded to SK E&C after a tendering process, is to build three underground storage caverns, each with a capacity of 14 million barrels.
The contract value is expected to support the growth and diversification of the UAE’s domestic economy by Dhs2.2bn.
ADNOC has undergone major changes since al-Jaber’s appointment in 2016, embarking on privatisation, oil trading and expanded partnerships with strategic investors.