Singapore secures Saudi crude storage plan for 2027

Singapore and Saudi Arabia have agreed to pursue underground crude oil storage on Jurong Island from the second half of 2027, strengthening supply safeguards amid disruptions caused by the war involving Iran.

The two governments announced the proposed arrangement on Monday as Saudi Aramco exchanged a memorandum of understanding with Singapore’s Energy Market Authority and industrial infrastructure agency JTC Corporation during Singapore International Energy Week.

The crude would be held at Jurong Rock Caverns, an underground storage complex designed for liquid hydrocarbons. The agreement remains subject to further negotiations, which Singapore’s Minister for Energy, Trade and Industry, Tan See Leng, expects to conclude within several months.

The initiative would place Saudi oil closer to customers across Southeast Asia while providing Singapore with additional supplies that could be used during an interruption to normal deliveries. Neither government disclosed the volume of Saudi crude earmarked for storage or the commercial terms of the proposed arrangement.

Tan said the arrangement would strengthen the resilience of Saudi Arabia’s regional supply chain and improve Singapore’s ability to withstand energy disruptions. The memorandum represents an initial step rather than a completed long-term storage contract.

Saudi Energy Minister Prince Abdulaziz bin Salman said in a recorded address to the conference that positioning crude closer to major Asian markets would increase flexibility across the kingdom’s distribution network and support Singapore’s preparedness for shortages.

The initiative follows extensive disruption to Middle Eastern oil shipments since the United States and Israel began their war against Iran in February. Restrictions affecting traffic through the Strait of Hormuz have complicated deliveries to Asian refiners and increased pressure on governments to secure alternative routes and emergency inventories.

Asia depended heavily on Middle Eastern crude before the conflict, making interruptions to Gulf exports particularly consequential for regional refiners. The Singapore arrangement would create an additional inventory location outside the Gulf, although the authorities have not specified how quickly stored barrels could be released or who would have priority access during an emergency.

Jurong Rock Caverns lies approximately 150 metres beneath Jurong Island, Singapore’s principal energy and petrochemical centre. The facility has capacity for about 1.47 million cubic metres, equivalent to roughly nine million barrels, of crude oil and condensate. That figure represents the overall facility capacity, not the amount allocated to Saudi Aramco.

Singapore’s government said the proposed storage would support domestic energy requirements during supply interruptions while reinforcing the reliability of Saudi crude deliveries across Southeast Asia. Its energy ministry and Saudi Arabia’s Ministry of Energy will coordinate the remaining arrangements with the participating organisations.

The project forms part of a wider effort to protect energy supplies following disruptions to Gulf shipping and infrastructure. Singapore imports virtually all its energy resources and relies on natural gas for most electricity generation, leaving its economy exposed to international fuel market disturbances.

During his conference address, Tan outlined measures intended to strengthen Singapore’s energy security, including diversified gas procurement and government fuel reserves. He said electricity generators must be capable of operating on either natural gas or diesel, allowing stored fuel to support generation during severe gas supply interruptions.

Singapore has also pursued cooperation with QatarEnergy and Abu Dhabi National Oil Company on gas, low-carbon technologies and broader energy partnerships. Its gas procurement entity GasCo separately signed a memorandum with Thailand’s PTT to explore improvements in liquefied natural gas supply arrangements.

Saudi Aramco already maintains overseas crude storage agreements in Japan and South Korea. Those arrangements help the producer position barrels near important customers while offering host countries access to oil during unexpected shortages under the applicable contractual provisions.

An agreement with South Korea’s Korea National Oil Corporation in 2023 covered 5.3 million barrels at storage facilities in Ulsan for five years. Aramco also expanded its Okinawa storage arrangement in Japan to 8.2 million barrels in 2017.

Singapore’s announcement follows questions about its exposure to disruptions involving Saudi Arabia’s East-West Pipeline, an export route that bypasses the Strait of Hormuz. Tan told parliament this month that the pipeline had resumed operations on 22 September after a temporary shutdown, although at reduced capacity.

He said Singapore had observed no decline in its crude oil or liquefied natural gas inventories during that interruption, with refineries and traders continuing to obtain supplies from sources beyond the Middle East.