UPDATE 1-Singapore scraps rock cavern oil bids; to re-issue

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By Jennifer Tan

SINGAPORE, May 14 (Reuters) - Singapore industrial landlord JTC Corp will scrap the operational tender for the city-state's underground rock cavern oil storage, and re-issue it three years later, adding to a slew of project delays worldwide due to poor economic conditions.

Last month, JTC awarded a S$890 million ($594 million) tender to South Korea's Hyundai Engineering (000720.KS) to construct the 9.5 million-barrel storage facility on Singapore's Jurong Island.

Bidders for the operational tender include Dutch oil and chemicals storage firm Royal Vopak NV (VOPA.AS), New York-based engineering and infrastructure consultants Parsons Brinckerhoff and storage operator Horizon Terminals Ltd, wholly owned by Emirates National Oil Co (ENOC), industry sources said.

"We will lapse the current tender and re-call it at a later stage, nearer the time of the completion of construction of the first two caverns, by 2013," a JTC spokeswoman told Reuters on Thursday.

"This is because of the shift in the timeline for a number of downstream projects, who are potential customers," she added, but declined to provide more details.

The decision on the bids for the operation of the project has been postponed numerous times -- the tenders were first called in late 2007 and the results have been plagued by months of delays since.

State agency JTC, who declined to name the bidders, had planned to unveil the winner in end-June, deferred from end-February.

The first phase of 1.48 million cubic metres (9.5 million barrels) comprises five caverns that could hold crude, naphtha, condensate and gas oil, most likely for commercial, rather than strategic purposes. The first two caverns are expected to be operational by 2013.

A planned second phase could add another 1.3 million cu m of storage, but a decision has not yet been made.

LOSS OF POTENTIAL CUSTOMERS

The delay or demise of various oil projects on the industrial and petrochemicals hub Jurong Island in recent months could have been the key reason behind JTC's decision, industry sources said.

Oil prices have also sank from their $147 a barrel peak last July, as the global financial crisis hit major economies, to around $57 a barrel, making such projects less attractive.

Jurong Aromatics Corp has delayed the start-up of its over-$2 billion aromatics complex to late 2012 or 2013 from 2011 due to credit financing issues, local media reported.

And Singapore oil trader Concord Energy has jettisoned its 150,000 barrels per day refinery project, months after it abandoned plans to build a $200 million condensate splitter on the same site.