China Petroleum & Chemical Corporation (Sinopec) has emerged as the frontrunner for Abu Dhabi Oil Refining Company’s (Takreer) fuel storage project in the Hamriyah free zone in Sharjah.

The Chinese firm has undercut the competition with a $124m bid for the project, and is favourite to win the engineering, procurement and construction (EPC) contract ahead of stronger technical bids.

“They are bidding low to get into the market,” said a source at a rival contractor. The construction of the tank farm would be Sinopec’s first project in the UAE.

India’s Larsen & Toubro submitted the second lowest bid at around $130m, with France’s Litwin bidding at around $140m. Larsen & Toubro’s technical bid was evaluated as the strongest by Takreer, with Sinopec’s bid only ranking fifth out of eight bidders.

Takreer’s decision over the contract has been described as slow by bidding companies.

“The reason is that sometimes the client also knows that you cannot do it with that little money. So they want to complete the due diligence before they award the contract,” says a source. “If it was Larsen & Toubro or Litwin, I think they might have already awarded it.”

The chosen contractor will construct a tank farm with a capacity of 83,000 cubic metres in the Hamriyah Free Zone, where gasoline, diesel, fuel oil and jet fuel will be bunkered. The facility will serve as a main supply point for service stations in the emirates of Sharjah, Ajman, Umm al-Quwain and the central region of the UAE.

The scope of the work includes a total of 10 storage tanks, loading and unloading facilities, pipelines and instrumentation works.

The other bidders are the local Al-Jaber Group, US-based Chicago Bridge & Iron Company, Pakistan’s Descon Engineering, South Korea’s Hyundai Engineering & Construction, and India’s IOT Infrastructure & Energy Services.