REFILE-UPDATE 1-BP aims to double fuel oil storage in Singapore

(Corrects date to Oct 5 ..., not Oct 4.)

(Adds details, market comments)

By Yaw Yan Chong

SINGAPORE, Oct 5 (Reuters) - BP Plc (BP.L) has reached initial agreement with Universal Terminal to take up an additional 250,000-300,000 cubic metres (cu m) of fuel oil storage in Singapore by first-quarter 2008, industry sources said on Friday.

When completed, the deal will see the major doubling its storage capacity for the utility and marine fuel in Asia's oil trading centre, bringing its total to about 600,000 cu m, to help keep its trading edge over rivals who are snapping at its heels.

When contacted, a senior executive at Universal Terminal declined comment while a BP spokesman could not be immediately contacted. Sources said the storage deal has yet to be officially signed, but BP has given a commitment to take up the tanks.

Universal, Asia's largest facility with 2.3 million cu m capacity when completed in the first quarter, is jointly owned by Singapore trader Hin Leong and PetroChina (0857.HK).

Traders said BP is taking up extra storage to maintain its competitive edge in the market, as other major players will also beef up their capacities amid a boom that will see an additional 4 million cu m by the end of the first quarter.

"Put it this way, BP used have the biggest guns in town before the current wave of expansion. By the first quarter, when the expansion has completed, their guns will no longer be the biggest," a Singapore-based Asian fuel oil trader said.

"If they want to mount a bull play next year, it would be harder to achieve their goals if more than one of the other larger players are on the other side. So they have to get bigger guns."

BP currently has about 300,000 cu m, or half the total fuel oil capacity at the Tankstore terminal in Singapore, which it shares with Singapore blending firm Kuo Oil.