Saudi Aramco has agreed to store crude oil in Singapore's underground Jurong Rock Caverns from the second half of 2027, energy ministers from both countries announced on Monday at the Singapore International Energy Week conference. Saudi Aramco signed a memorandum of understanding with Singapore's Energy Market Authority and JTC Corporation, with parties aiming to conclude full negotiations within a few months, according to Singapore's Minister for Energy, Trade and Industry Tan See Leng. The agreement is aimed at securing energy supplies for south-east Asia amid disruption to flows through the Strait of Hormuz caused by the US-Israeli war with Iran.
Saudi Energy Minister Prince Abdulaziz bin Salman Al-Saud said via video that bringing supply closer to key Asian markets would strengthen the flexibility of the supply network and support Singapore's security of supply and preparedness. The Jurong Rock Caverns sit 150 metres below ground on Jurong Island and can store up to 1.47 million cubic metres — roughly 9 million barrels — of liquid hydrocarbons including crude oil and condensate. The announcement did not specify how much of that capacity would be allocated to the Saudi arrangement.
The deal comes as the US-Israeli war with Iran has severely disrupted energy supplies to Asia shipped through the Strait of Hormuz, prompting countries to draw down inventories and raising concerns about stockpile levels globally. Asia imported two-thirds of its oil supplies from the Middle East before the conflict, making alternative storage arrangements close to consuming markets a priority for regional governments. Because no barrels will flow to Singapore before the second half of 2027, the near-term physical oil price impact of the arrangement is limited.
The Singapore agreement extends a pattern of Aramco forward-positioning crude reserves across Asia. The company currently stores crude in Japan and South Korea, where local governments hold priority purchase rights in the event of an unexpected shortage. In September 2017, Aramco Japan expanded storage capacity in Okinawa to 8.2 million barrels under an agreement with Japan's JOGMEC, and in 2023 Aramco signed a deal with Korea National Oil Corp to store 5.3 million barrels in reserve facilities at the port of Ulsan for five years. Singapore would represent an additional Asian storage location alongside those existing arrangements.
Sources: Reuters, Bloomberg, Financial Times, Arab News, Egypt Oil & Gas