Norway's Stolt-Nielsen is the frontrunner to win a contract to develop land and build storage for up to 4 million barrels of oil and chemicals at Singapore's Jurong Port, five industry sources told Reuters.

Singapore, Asia's largest oil trading hub, is redeveloping Jurong Port, on the western tip of the island, and the cost of the storage and terminal work has been estimated by industry at up to $300 million.

"All indications are that Stolt is the frontrunner to get the contract," a senior executive familiar with the bidding process told Reuters.

A decision on the contract, which was originally due to be awarded in December, is expected within a few months, the sources said.

Stolt-Nielsen and Jurong Port declined to comment.

Jurong Port is a subsidiary of Singapore infrastructure specialist, Jurong Town Corporation (JTC).

The new storage facility is expected to have 3.15 million barrels of storage for oil, with chemicals taking up most of the remaining capacity.

China Aviation Oil (Singapore) and Geneva-based trading company Vitol also participated in the bidding.

Stolt-Nielsen is being favoured because of its experience in chemical shipping and storage, as well as terminal operations.

"One of the strongest elements of its bid is that it has that background in chemicals," one of sources familiar with the bid said.

"They also were more willing to portion out a bigger segment of the total storage capacity to chemicals ... that falls in line with Singapore's broader plan to develop more high value industries around the petrochemicals sector."

The company's terminal business also acts as a hedge to volatile shipping markets, analysts familiar with the company said.

"Stolt-Nielsen's terminals complement their chemical shipping and tank container businesses, and by investing in it they can pull in more business in the other segments too," Oslo-based analyst Erik Folkeson at Swedbank First Securities said.

"The terminals also offer a more stable contribution to cash flow and profits and therefore act like a hedge against the more volatile shipping operations. So an expansion of this business is good in our view."

Stolt-Nielsen already has experience in Asia and started operations at a 75,000 cubic-meter chemical storage facility on Jurong Island in November.

"They have plans to expand this facility by up to 300,000 cubic meters through 2013, 2014," one of the sources said.

The facility is operated by Stolt-Nielsen's subsidiary, Stolthaven Terminals, which also has operations in China and Malaysia.