Korean contractor to build Adnoc's underground oil bunker in Fujairah
HH Sheikh Mohammed bin Zayed Al Nahyan oversees deal-signing for world's largest underground oil storage facility
Abu Dhabi National Oil Company (Adnoc) will build the world’s largest single underground oil storage facility in Fujairah, plans for which were announced on the side-lines of an official meeting in Seoul between HH Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and South Korea's President Moon Jae-in.
South Korea’s SK Engineering and Construction Company (SKEC) was awarded an engineering, procurement, and construction (EPC) contract to work on the project’s three underground storage caverns – each with a capacity of 14 million barrels of crude oil.
Adnoc said the EPC contract – valued at $1.2bn (AED4.4bn) – is the world's largest award for an underground crude oil storage project. Approximately 50% of the contract spend will feed back into the UAE economy through Adnoc’s In-Country Value programme.
The agreement furthers the relationship between Korean companies and Adnoc, which was reiterated in March 2018 when the oil company awarded two contracts to Samsung Engineering – one each to introduce crude oil processing flexibility, and to recover power and water at its Ruwais refinery.
In 2015, Korea's GS Energy was awarded 3% stake in Adnoc Onshore's concession. Separately, Korea National Oil Corp and GS Energy hold a 40% stake in Adnoc's Al Dhafra Petroleum concession area, where crude production will begin in 2019.
Work on the project started in 2018, with its first phase – which involved the construction of an access tunnel – already complete. Due for completion in 2022, Adnoc Fujairah Underground Storage will allow the oil company to store three different types of crude oil, which the state-held firm said will provide "increased flexibility to export crude through Fujairah’s Arabian Sea oil terminal".
HE Dr Sultan Ahmed Al Jaber, UAE Minister of State and Adnoc Group’s chief executive officer, signed the construction agreement with Jae Hyun Ahn, SKEC’s president and chief executive officer. HH Sheikh Mohammed and President Moon oversaw the signing ceremony at Blue House.
Commenting on the project, Al Jaber said: "Adnoc has a long and successful history of working with Korean companies as partners in our upstream concession areas, as contractors for major projects across the oil and gas value chain, and as a customer of Abu Dhabi’s crude oil and our refined products.
"This project is a testament to the strong strategic partnership between UAE and South Korea.”