The main construction award came about one and a half years after the tender was first called by Singapore’s government agency JTC Corporation in late-2007.

Construction is finally set to start after JTC awarded a $594-million (S$890 million) ‘design and build’ contract to South Korea’s Hyundai Engineering & Construction.

The first two Jurong Rock Caverns (JRC) providing 480,000 cubic metres (m³) of oil storage are expected to be ready in the first half of 2013, later than the originally planned 2010 start.

The entire first phase, comprising five caverns, will offer a total of 1.47 million m³ when completed in 2014.

The underground JRC project seeks to alleviate the land constraint on Jurong Island, which houses oil tanks operated by various major global and local firms.

Storage operation on Jurong Island currently includes Horizon Terminals at 1.24 million m³ capacity and Universal Terminal at 2.3 million m³.

The cost for phase one JRC has run up to $627 million (S$940 million) from an earlier estimate of $467 million (S$700 million).

The operator of JRC is expected to be announced by the middle of this year, according to JTC officials.

Existing terminal operators in Singapore such as Royal Vopak and Emirates National Oil Company (ENOC) are known to be interested in the underground storage operations.

The underground storage facilities are being constructed about 130 kilometres (km) below the seabed, and Hyundai has the experience to carry out ‘drill and blast’ excavation using explosives.

Phase one will involve eight km of tunnels with five caverns each measuring 340 metres (m) long, 20 m wide and 27 m high.

The first phase underground caverns will most likely be for commercial rather than strategic purposes, and will store mainly crude, naphtha, condensate and gas oil.

A planned phase two of the JRC could add a further 1.3 million m³ of storage but a decision has not yet been made.