Abu Dhabi National Oil Company (ADNOC) is constructing a crude oil storage facility under the Fujairah mountains in the UAE, sources with knowledge of the matter told Reuters.

The underground facility, named Mandous, will have a storage capacity of roughly 40 million barrels of oil and is expected to be completed by 2020, one of the sources said.

South Korea’s SK Engineering & Construction was the winner of the contract to build the facility.

In 2017, ADNOC agreed with India to store 6 million barrels in the country’s Mangalore storage site, taking up roughly half the facility’s capacity. In May ADNOC supplied its first cargo to the Indian Strategic Petroleum Reserves Ltd (ISPRL), with the aim of boosting its market share in Asia.

The emirate of Fujairah is located at the entrance of the Strait of Hormuz, a strategic shipping lane, and is one of two major bunkering points in the area, the other being Oman’s Sohar. It is a refuelling point for tankers taking crude out of the Gulf.

The Abu Dhabi Crude Oil Pipeline (ADCOP) transports the majority of UAE crude oil to facilities in Fujairah, bypassing the Strait of Hormuz. It has a capacity of 1.5 million barrels per day (b/d).

The UAE currently produces roughly 3 million b/d, and has plans to boost production to 3.5 million b/d by the end of this year in line with OPEC output increases.