SKEC wins $1.21bn contract for underground oil storage caverns in UAE


The Abu Dhabi National Oil Company (Adnoc) has awarded an AED4.4bn ($1.21bn) EPC contract to South Korea’s SK Engineering and Construction (SKEC) for three underground storage caverns, each with a capacity of 14m barrels.

Adnoc said that it is building the world’s largest single underground project for oil storage in the Emirate of Fujairah on the eastern coast of the UAE. The storage facility will have a capacity of 42m barrels of crude oil.

It is also the largest EPC contract for a single project award for underground crude oil storage in the world.

Around 50% of the contract spend will be fed back into the UAE economy through Adnoc’s In-Country Value programme.

The Adnoc Fujairah Underground Storage is expected to strengthen the UAE’s position as a reliable supplier of crude oil. The company will also have greater flexibility to manage and optimise its delivery schedule and support its move into trading.

The facility is also expected to improve Adnoc’s position as a major trading and supply partner in Fujairah’s growth as a global oil and products storage and trading hub.

Work began in 2018 and the first phase of the underground storage facility, involving the construction of an access tunnel, has been completed.

When complete in 2022, the facility will be able to store three types of crude oil, providing Adnoc with greater flexibility to export crude through Fujairah’s Arabian Sea oil terminal.

As much as AED2.2bn ($600m) is expected to flow back into the UAE’s economy, giving a significant stimulus to the country’s products and services, manufacturing and assembly and infrastructure sectors, and also create additional employment opportunities.

In November 2018, Adnoc signed an agreement with Indian Strategic Petroleum Reserves (ISPRL) to explore storing Adnoc crude oil at ISPRL’s underground storage facility at Padur in Karnataka, India.

Adnoc also stores up to 6.29m 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.


Image: SKEC wins $1.21bn contract for underground oil storage caverns in UAE. Photo: Courtesy of akiraone at

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