State-owned National Iranian Oil Company (NIOC) signed a major contract for the construction of a long-planned new 10 million barrel crude oil storage depot at its strategically located Jask port, the company announced on 30 September.

Three Iranian contractors - Petroleum Engineering and Development Company (PEDEC), Petro Omid Asia and Omid Investment Management Group - signed a €606m ($704m) contract with NIOC.

This covers the construction of the storage terminal over three years, and its operation for another 15 years, state-run Iran Labour News Agency reported.

The project will use a build-operate-transfer (BOT) contract model. The new terminal will store 10 million barrels of Iranian crude of various grades in 20 tanks, with a capacity of 500,000 barrels in each. This is located in 5,000 hectares of coastal land allocated by NIOC for new oil, gas and petrochemicals projects.

The tank farm will be linked to Iran’s crude oil production facilities through a 42-inch crude oil pipeline carrying up to 1 million barrels a day (b/d) of oil. It will also be connected to single-point moorings on Iran’s Gulf of Oman coast to allow for exports. The tank farm covers a total area of 600 hectares, and could be expanded to store as much as 30 million barrels eventually.

The pipeline, currently under construction, runs over 1,000 kilometres from Genaveh in the southern Bushehr province to Jask in Homorzgan province.

Jask’s development into a major oil processing and export hub is a strategically important project for Iran. The Islamic Republic currently exports 90 per cent of its 2.5 million b/d crude exports come from its terminal at Kharg Island in the northern Gulf, so Jask will give it some flexibility in managing shipments. It also sits outside the Strait of Hormuz, a critical choke point on the Gulf, giving easier access for exports through the Indian Ocean.