Jurong Caverns Set to Store Saudi Crude in 2027, With Maximum Capacity of 1.47 Million Cubic Metres
Key Facts
Singapore and Saudi Arabia said they intend to establish an arrangement to store Saudi crude in the Jurong caverns from the second half of 2027, in a move aimed at supporting the resilience of Saudi supplies in Southeast Asia and Singapore’s energy security. Singapore’s Ministry of Energy and Trade and Industry said the proposed arrangement serves both goals, strengthening the resilience of the Saudi crude supply chain and contributing to energy security in the event of supply disruptions. The volume of crude Aramco will store has not been announced, while the facility has a maximum capacity of 1.47 million cubic metres of liquid hydrocarbons, according to JTC. The initiative focuses on storage at an existing commercial underground facility on Jurong Island. Energy and Trade and Industry Minister Tan See Leng said Aramco would sign a memorandum of understanding with the Energy Market Authority of Singapore and JTC later on the day of the announcement, and the parties aim to conclude negotiations within a few months.
The project’s timing forms part of a market backdrop of declining inventories, according to estimates from the US Energy Information Administration. The agency estimated that global oil inventories fell by an average of 1.9 million barrels per day in the third quarter of 2026, and forecast a further decline averaging 0.7 million barrels per day in the fourth quarter. These figures put the expected inventory decline in the final quarter below the average drop recorded in the previous quarter. In its October outlook, the agency said continued production disruptions, higher transport costs and risk premiums could keep oil prices elevated until constraints on crude flows from the Middle East ease and inventories are replenished. This assessment links supply, transport and inventories, while the Saudi-Singapore storage project remains on a negotiation track whose commercial details have not yet been announced.
Storage flexibility takes on added importance in light of the Singapore ministry’s account of Saudi Arabia’s East-West pipeline. The pipeline was temporarily shut on 11 September 2026, then resumed operations at reduced capacity on 22 September. The ministry warned that a prolonged stoppage could reduce the availability of Saudi crude in a tight global market and add to price pressures. It also said Singapore had not recorded a decline in its crude and liquefied natural gas inventories during the temporary stoppage. This context combines a temporary disruption that, according to the ministry, did not reduce Singapore’s inventories with broader risks to crude availability if supply disruptions persist.
The Jurong caverns are located 150 metres underground and 130 metres below Banyan Basin on Jurong Island, and can store up to 1.47 million cubic metres of liquid hydrocarbons, including crude oil and condensates, according to JTC. This is the facility’s total maximum capacity, while the share that may be allocated to Saudi crude under the arrangement has not been disclosed. JTC describes the site as Southeast Asia’s first commercial facility to use underground rock caverns to store liquid hydrocarbons. Using underground space frees up about 60 hectares of surface land for other activities, according to the company. These specifications provide background on the infrastructure that will host the arrangement, without defining the actual volume or storage terms between the parties.
Looking ahead, the US Energy Information Administration forecast that most of the region’s production would return to its pre-conflict average by the end of the second quarter of 2027, and projected an average spot Brent price of $87 per barrel that quarter. It then forecast the average oil price would fall to $74 per barrel in the fourth quarter of 2027, as inventories recovered during the year. The agency cautioned, however, that crude flows and prices could remain volatile in the short term because of the conflict in the Middle East. These estimates come as Singapore and Saudi Arabia target the start of storage in the second half of 2027, after the period in which the agency expects most production to return to its pre-conflict average. The next step in the arrangement is to sign the memorandum of understanding, with the parties aiming to conclude negotiations within a few months, according to the Singapore minister.