Saudi Arabia has struck a deal with the Singaporean government to store crude oil in underground caverns in the city-state, Bloomberg reported today. The report follows the latest Houthi attacks on Saudi infrastructure over the weekend, which included oil facilities among their targets.
The Saudi crude will be stored in the Jurong Rock Caverns, which are part of a petrochemical complex in southern Singapore, with deliveries to the caverns set to begin in the second half of next year. The caverns have a capacity of 1.47 million cu m of crude oil, condensates and other liquids, which is equivalent to 9 million barrels.
Saudi Aramco, meanwhile, is looking for more storage capacity abroad, the report also said. The Saudi energy industry has been squeezed by the war in the Persian Gulf, which has now expanded to the Red Sea, with the Yemeni Houthis following in Iran’s footsteps and targeting enemy vessels and infrastructure everywhere they can reach them. As a result, Saudi Arabia’s exports have been disrupted, prompting Aramco to resort to ship-to-ship transfers in the Gulf of Oman in the east, and send tankers via the Suez Canal in the west.
“This arrangement enhances the resilience of the Saudi crude oil supply chain in Southeast Asia, as well as contributes to Singapore’s energy security and resilience in the event of supply disruptions,” Tan See Leng, Singapore’s energy minister, said.
“Bringing supply closer to the key Asian market would strengthen the flexibility of our supply network and support Singapore’s security of supply and preparedness,” Saudi energy minister Prince Abdulaziz bin Salman said. “We see the potential for this cooperation to grow further.”
Asia is indeed a key market for Aramco and other Middle Eastern producers, and as such has been the hardest hit by the supply crisis that resulted from the war between the U.S. and Israel, and Iran.
By Irina Slav for Oilprice.com
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