The deal marks the sale of the crown jewel among oil and shipping assets owned by oil tycoon Lim Oon Kuin, his son Evan Lim Chee Meng and daughter Lim Huey Ching.

It comes nearly a year after Hin Leong, once Asia's largest oil trader, racked up some $4 billion in debt and entered court restructuring, followed by Ocean Tankers and Xihe Group also owned by the Lim family.

Government-owned Jurong Port is set to take over the Lim family's stakes in the terminal, the sources said, declining to be named as they are not authorised to speak to the media. The Lim family managed and owned 41% of Universal Terminal through Universal Group Holdings.

"Jurong Port's participation was well received by existing investors as it's a neutral partner as compared with commercial parties such as a trading house," said one of the sources.

The investment details were not immediately clear but a previous sale of a stake in the terminal in 2016 valued the whole terminal at more than $1.5 billion, industry sources said at the time.

China's state energy company Sinopec had previously been in talks to buy the Lim family's stakes.

Some of the fuel stored at the terminal is being claimed by creditors including Sembcorp Cogen Pte Ltd, a unit of Sembcorp Industries, and Cooperative Rabobank U.A. Singapore.

Jurong Port has appointed an interim chief executive for the terminal and has started marketing the storage space informally, said two other sources.

Jurong Port and representatives of the Lim family did not immediately reply to Reuters' emailed requests for comment.

PetroChina International (Singapore) owns 25% of the terminal while MAIF Investments Singapore, a unit of Australian investment bank Macquarie Group, holds the remaining 34%.

The terminal, with 2.33 million cubic metres of oil storage capacity and deepwater berthing facilities that allows two supertankers to dock at the same time, is regarded as a most prized asset invested in by the Lim family. The family also owns about 130 oil tankers, some of which are being sold to pay down debts.

Jurong Port, a fully owned subsidiary of Singapore's industrial property developer and planner JTC Corp, entered the oil storage business in 2019 in a tie-up with independent storage operator Oiltanking.

It wants to diversify its revenue as volumes passing through its cement and steel terminals fell amid a slowdown in the construction and shipbuilding sectors, its chief executive has said.

(Reporting by Jessica Jaganathan and Chen Aizhu; Editing by Florence Tan and David Evans)

By Chen Aizhu and Jessica Jaganathan