Saudi Arabia to store oil in Singapore’s Jurong Rock Caverns to boost Asia supply security

Saudi Arabia plans to store crude oil at Singapore’s Jurong Rock Caverns ‌from the second half of 2027 to strengthen supply security in the region, energy ministers from both countries said on Monday.

The agreement comes against the backdrop of severe disruption to energy shipments following the US-Israeli war with Iran, which has affected traffic through the Strait of Hormuz, a critical maritime route connecting Gulf oil producers with international markets.

Before the conflict, Asia sourced about two-thirds of its oil imports from the Middle East, making the region particularly exposed to interruptions in Gulf supplies.

For Saudi Arabia, storing crude in Singapore offers a way to position supplies nearer to major Asian consumption centres and strengthen the reliability of deliveries. For Singapore, the arrangement could provide an additional source of supply during emergencies, reinforcing its position as a regional energy trading and storage hub.

“Bringing supply closer to key Asian markets would strengthen the flexibility of our supply network and support Singapore’s security of supply and preparedness,” Saudi Energy Minister Prince Abdulaziz bin Salman Al-Saud said in a recorded message at the Singapore International Energy Week conference.

Strategic underground storage

The Jurong Rock Caverns facility lies about 150 metres underground and has a total capacity of approximately 1.47 million cubic metres, equivalent to roughly nine million barrels of liquid hydrocarbons, including crude oil and condensate.

However, the two governments have not disclosed how much capacity would be allocated to Saudi crude, the investment involved or the commercial terms of the proposed arrangement. The memorandum of understanding marks an initial step rather than a completed commercial storage contract.

The underground facility allows Singapore to store hydrocarbons without relying exclusively on conventional above-ground tanks. Its location on Jurong Island, a major centre for refining, petrochemicals and energy infrastructure, also places it within an established industrial and trading ecosystem.

Singapore’s Energy Minister Tan See Leng said the arrangement would improve the resilience of the Kingdom’s crude supply chain in Southeast Asia while contributing to Singapore’s energy security in the event of supply disruptions. The two governments will coordinate implementation as negotiations progress.

Building a wider Asian storage network

The Singapore initiative builds on Saudi Aramco’s existing overseas storage arrangements in Asia.

In Japan, the company has maintained crude storage facilities in Okinawa, where Japan receives preferential access to the oil during emergencies while Aramco can use the location as a supply hub for regional customers.

Aramco also agreed in 2023 to store 5.3 million barrels of crude at facilities operated by the Korea National Oil Corporation in Ulsan, South Korea, under a five-year arrangement.

These partnerships demonstrate how overseas storage can serve both commercial and strategic objectives by placing crude nearer to customers while giving host countries additional options during supply shortages.

The latest move comes as Asian governments reassess their exposure to energy disruptions.

Japan has been pursuing its Partnership in Wide Energy and Resources Resilience Asia, or POWERR Asia, initiative, which seeks to strengthen regional cooperation on energy supplies and reserves.

A proposed USD 10 billion in financial assistance supports the programme.

While China, Japan and South Korea have built substantial oil stockpiles, several other Asian economies have less room to absorb prolonged interruptions to imports.

Greater regional storage capacity and cooperation could therefore become increasingly important to energy-importing countries.

Singapore’s role in regional energy security

Singapore’s importance extends beyond the storage of crude. Its established refining industry, shipping connections and oil-trading ecosystem make it a strategic location for managing supplies across Asia.

For Saudi Aramco, positioning crude there could improve its ability to respond to changing demand and logistical disruptions, although the scale of any benefit will depend on the volume stored and the eventual operating arrangements.

The agreement also reflects a broader shift towards diversifying supply-chain infrastructure rather than relying solely on uninterrupted maritime transport.

Storage cannot eliminate the risks associated with blocked shipping routes or damaged energy infrastructure, but it can provide a buffer and improve the flexibility of deliveries.

The commercial details remain unresolved, and the planned start in the second half of 2027 leaves time for negotiations and implementation.

Nevertheless, the proposed arrangement signals that Saudi Arabia and Singapore are seeking to strengthen their energy partnership at a time when the security of oil supplies has become a pressing concern for Asian economies.

For Saudi Arabia, the objective is to reinforce its position as a dependable supplier. For Singapore and its regional trading partners, the potential benefit lies in having more options when global energy flows are disrupted.