The state-run Korea National Oil Corp. will join Vietnam’s underground oil storage facility construction project, company officials said.

“KNOC has decided to join the project to build an underground facility to store up to 3.8 million barrels of oil in Dung Quat, Vietnam, in cooperation with Vietnam-based PVOS,” the officials said, adding that the project would be KNOC’s first oil storage project overseas.

Petro Vietnam Oil Stockpile embarked on the project to accommodate the needs of the oil and gas industry in consideration of commercial reserves, production reserves, national stockpiling and international oil trading.

According to the company, KNOC will lead the project by securing a 71-percent stake in the consortium, while the PVOS will hold a 29-percent stake. KNOC will retain an 11 percent stake, and sell 60 percent of the shares to local engineering companies, builders and financial investors.

In addition, the contact with PVOS will be based on the build-own-operate format, which means that the KNOC-led consortium will lead the financing, construction, operation, and maintenance of the facility.

Under the contract, the consortium will be given the right to operate the facility for 50 years, KNOC officials said.

KNOC will complete the signing of the contact by the end of this year.

KNOC predicted that the project would cost $150 million and take three and a half years to complete. It added that it would expand its oil storage facility business overseas as a new growth engine.

By Seo Jee-yeon (jyseo@heraldcorp.com)