Wednesday, Oct 03, 2007
SINGAPORE (Dow Jones)--Singapore plans to raise its underground petroleum storage capacity at Jurong Island's yet-to-be-completed Jurong Rock Cavern by 90%, and will likely build the country's inaugural Very Large Floating Structures to plug an expected shortfall in oil product storage capacity.
Although Singapore's oil product storage capacity will rise by 76% to 8.1 million cubic meters by 2008, the additional 3.5 million cubic meters of storage capacity being built by private operators, including Universal Terminal and Chemoil Energy Ltd. (AV5.SG), won't be sufficient to satisfy rising demand.
Singapore will still lack at least 3 million cubic meters of petroleum storage space despite the additional capacity, JTC Corp.'s Assistant Chief Executive Officer Philip Su told a conference Tuesday.
"In addition, demand for storage is expected to increase as some oil-rich countries, like Brazil and the U.A.E., are looking for overseas storage facilities to house their reserves," the official from the government's real estate arm added.
As such, JTC plans to expand its underground storage capacity to 2.79 million cubic meters and invest at least S$180 million ($122 million) in the first batch of VLFS, which will have an initial storage capacity of 300,000 cubic meters, to alleviate the expected shortage in storage capacity.
"Phase 1 of the feasibility study concluded that the VLFS for oil products and petrochemical storage is technically feasible," Su said.
However, Phase 2 of the feasibility study - which will include in-situ marine data collection, engineering design, scaled modeling and specialized tests, business operating model, security and marine environmental impact assessments - will only be completed by the end of next year.
Although the feasibility study hasn't ended, JTC Corp. is already in talks with several oil trading companies that have expressed interest in renting the country's first batch of VLFS.
If built, the VLFS will occupy five hectares of foreshore area and provide the land-scarce country with 300,000 cubic meters of storage capacity, compared with at least 20 hectares of land area for the same volume.
JTC Corp. also wants to start building Phase 2 of its underground Jurong Rock Cavern, due to overwhelming demand for oil products storage, Su said.
Phase 1, which will have a capacity of 1.47 million cubic meters and cost S$700 million to build, will be ready in 2010.
The construction of Phase 2 will commence after that and provide an additional 1.32 million cubic meters of underground storage capacity, JTC Corp. said without specifying the construction cost for Phase 2.
Singapore is a major oil trading and distribution hub in Asia, and the government aims to reinforce the country's position by raising its oil storage capacity.
In 2006, Singapore's total physical oil trade was valued at US$300 billion.
-By Seng Li Peng, Dow Jones Newswires; 65-6415-4067; li-peng.seng@dowjones.com
(END) Dow Jones Newswires
03-10-07 0634GMT
