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China's Sinopec Corp says that it will delay the construction of what would be Southeast Asia's largest oil storage terminal due to slow demand, Reuters reports, citing industry sources.

Plans to build a 2.6 million-cubic-metre storage facility in Indonesia's Batam free trade zone, located south of Singapore, was expected to become operational by mid-2016, but construction has yet to commence and the terminal will not be ready for at least another three to five years, sources told Reuters.

"There's not enough demand in the region right now," a source familiar with the project said, adding that a number of the new storage projects recently built in Malaysia had not yet been filled. "It's about the timing to the market."

The lack of land space for the further expansion of oil facilities in Singapore - Asia's leading oil trading hub - has led to significant investment in the development of storage terminals in nearby Malaysia and Indonesia.

Sinopec subsidiary Sinopec Kantons Holdings holds a 95 percent stake in the Batam terminal. The remaining 5 percent is owned by a local Indonesian firm.

In 2012, Reuters reported that Sinopec and its partner would spend $850 million on the project. The plan was to initially store 1.9 million cubic metres of crude and fuel oil and 730,000 cubic metres of diesel, jet fuel and gasoline. However, the aforementioned delay may lead to Sinopec changing its plans for the project, a source said, adding that the strategy could be redesigned to focus on crude and oil products equally.

Sinopec Kantons is expected to tender for the engineering, procurement and construction (EPC) contract of the Batam terminal within the next few months, a market source informed Reuters.