SINGAPORE (Sep 3): Singapore aims to double its petrochemicals production by the end of the next decade and is setting aside up to 40 percent of its reclaimed land on Jurong Island for new chemical plants, a JTC Corporation executive told Reuters in an interview.

And to make sure it has sufficient space for these plans for petrochemical expansion - which is more lucrative than refining and storing crude and oil products - land-scarce Singapore has gone underground for oil storage on Jurong Island.

The just-opened Jurong Rock Caverns cost almost a third more than onshore tank farms of a similar capacity, but the facility has left enough land open for six chemicals plants.

"The amount of land we have is just limited. I think we want to be able to focus on petrochemical plants as we go forward in terms of development," assistant JTC CEO Heah Soon Poh said in an interview at the official opening of the caverns on Tuesday.

"The more downstream you go, the higher the value that's created," Heah said.

The chemicals industry contributes around 30 percent of Singapore's manufacturing output, which in turn makes up about 20 percent of the country's gross domestic product.

"We have about 4 million tonnes per annum (mtpa) and I think going forward, we are looking at a possibility of growing that to between 6 and 8 mtpa," Heah said.

There is still 30-40 percent of the land on Jurong Island "reserved either for the expansion of existing plants or new plants that fit into the whole value chain", he said.

Heah did not mention any specific expansion plans or new projects, but said in an e-mailed statement that JTC is "in discussions with several companies on this".

Any new storage facilities will be strictly reserved for manufacturers to use to store feedstocks rather than for trading, Heah said.

"We have had traders coming to us, and we have said 'no'," he said.

STORAGE BINGE

JTC, the government agency in charge of the planning and development of Singapore's industrial landscape, opened Asia's first subterranean oil storage facility this week after starting construction in 2007.

Located 130 meters beneath the Banyan Basin in Jurong Island, Jurong Rock Caverns will provide up to 1.47 million cubic meters of storage by 2016, including for crude and condensate.

At a price tag of $950 million, the underground storage facility costs almost 30 percent more than onshore tank farms with a similar capacity, but it has helped to save 60 hectares of land that can be used for chemicals plants.

According to official data from trade promotion body IE Singapore, trade in petroleum oils more than tripled over 2003-2013 to S$44 billion ($35 billion), accounting for more than 4 percent of the country's total trade last year.

With Singapore unable to commit more land to commercial storage to serve trading companies, Indonesia and Malaysia have stepped up their own investments into oil and chemicals storage infrastructure and could offer a combined 8 million cubic meters by 2016, a third of Singapore's 23 million cubic meters.

The pricing of regional oil benchmarks is also changing to reflect the widening geography of storage terminals beyond Singapore, similar to the European model in Amsterdam-Rotterdam-Antwerp.

(1 million cubic meters = 6.3 million barrels; $1 = S$1.2508)