Oman to explore underground oil storage options in Duqm SEZ

Oman Oil and Orpic Group, the Sultanate’s newly established integrated energy conglomerate, has signed an agreement with South Korean engineering contracting SK Engineering and Construction (SKEC) to support the development of oil storage and terminaling business opportunities at the Special Economic Zone (SEZ) in Duqm.

A Memorandum of Understanding (MoU) to this effect was signed recently by Talal al Awfi, Chief Commercial Officer Oman Oil and Orpic Group.

Both parties will work closely to establish an anchor customer base and explore interest from strategic partners for the project. This project will focus more specifically in utilising natural caverns as a means of storing oil, leveraging on Oman’s geological formations and geographical location, said Oman Oil and Orpic Group in a tweet earlier this week.

Oman Tank Terminal Company (OTTCO), a wholly owned subsidiary of the Omani energy powerhouse, is developing one of the world’s largest crude oil storage parks at Ras Markaz, about 80 km north of the Duqm SEZ. Though its location is not contiguous with the SEZ, the terminal is still a key component of the SEZ initiative its development being overseen in close coordination with the SEZ Authority of Duqm (SEZAD).

Covering an area of 1,253ha, the Ras Markaz terminal will boast a total capacity of 200 million barrels of crude oil upon completion. Development is planned in a series of five phases, with total investment estimated at around $5 billion.

This week’s MoU with SKEC will allow for Oman Oil and Orpic Group to look at options for underground crude storage that takes advantage of the rocky limestone headlands characteristic of the Sultanate’s coastline along Duqm. Caverns occurring naturally in these parts can be economically transformed into storage sites for crude and other petroleum products, market analysts point out.

According to experts, underground crude storage is gaining popularity around the world, as countries see the strategic and economic benefits of converting existing salt caverns or constructing underground storage bunkers to develop emergency stockpiles.

Underground storage of hydrocarbons is billed as not only more safe, secure and economical than above-ground storage infrastructure, but it also comes with a number of environmental and operational benefits. Furthermore, naturally occurring caverns can be rapidly brought into operation than conventional tank-based storage superstructure, it is noted.

In the Gulf region, the world’s biggest underground crude storage facility is currently being built in the UAE emirate of Fujairah with an investment of around $1.2 billion. Featuring three caverns, each offering a capacity of 14 million barrels, the project is slated for completion by 2022. Significantly, SK Engineering and Construction (SKEC) is the main contractor for this project.

India is also developing around 5 million metric tonnes of strategic crude oil storage at three locations in the southeast and west of the country. Construction is being overseen by Indian Strategic Petroleum Reserves Limited (ISPRL), a special purpose vehicle wholly owned by the Oil Industry Development Board (OIDB) under India’s Ministry of Petroleum and Natural Gas.

The United States has created huge oil stockpiles as part of its Strategic Petroleum Reserve in salt caverns along the Gulf Coast of the US. They hold several hundred million barrels of crude.

Source: Oman Observer

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