Oman Oil, IPIC to ink pact for Duqm Refinery development

By Conrad Prabhu ? MUSCAT ? The wholly government owned investment entity Oman Oil Company (OOC) will shortly sign an agreement with Abu Dhabi?s International Petroleum Investment Company (IPIC) formalising their partnership in the joint development of the Sultanate?s third refinery at Duqm. The pact will pave the way for the establishment of a joint venture company to invest in, develop and implement the greenfield refinery project within the Special Economic Zone at Duqm. It will also enable the promoters to secure debt finance for the project, which is estimated to cost $6 billion.
?In this upcoming agreement, both sides will commit themselves to the joint implementation of the Duqm Refinery project. This would represent a significant ramp-up of their initial partnership arrangement to jointly evaluate the feasibility of the refinery venture, to a firm pledge to see the project through to fruition,? a government official told the Observer. In conjunction with the signing of a formal agreement, the joint developers are also expected to reveal their choice of a Project Management Consultant to oversee the construction of the massive venture. Oman Oil Company has also appointed a Project Director to liaise with the Project Management Consultancy firm during the implementation phase of the project.
Significantly, the impending agreement will add to a flurry of developments designed to pave the way for the expeditious development of the 11.5 million tonnes per annum (230,000 barrels per day) capacity grass roots refinery. The project also anchors an ambitious petrochemicals cluster envisaged in later phases of Duqm?s development as an industrial hub. Last month, Oman Oil Company and the Port of Duqm Company, which operates a giant multipurpose port adjoining the Duqm SEZ, announced plans for the formation of a joint venture named Duqm Petroleum Terminal Company (DPTC) to operate and manage a new Liquid Jetty at Duqm. While Oman Oil will hold a 90 per cent stake in the JV, the balance will be offered to Port of Duqm Company.

The jetty will handle the massive liquid volumes in crude feedstock and refined products that will flow through the port when the refinery is operational tentatively in 2017. Designed to accommodate ships of around 150,000 deadweight tonne (DWT) capacity, the Liquid Jetty will be connected to the refinery via a network of pipelines. Earlier this month, Oman Oil subsidiary Oman Gas Company (OGC), which operates the country?s 2,500-kilometre gas transportation grid, firmed up plans for the construction of a pipeline to supply Duqm with its requirements of natural gas as energy and feedstock.

The 230-kilometre pipeline, which will channel gas from Saih Nihayda in central Oman to Duqm, will supply gas to a proposed power and water project and cement plant, as well as the refinery and petrochemical complex. At the same time, a number of international engineering consultants are preparing to bid for a contract to undertake the Front End Engineering Design (FEED) for the refinery project. Around eight companies are understood to have been prequalified to participate in the FEED tender.

The Special Economic Zone Authority of Duqm (SEZAD), for its part, has pledged to facilitate the rapid implementation of the refinery and associated petrochemical complex. An initial 900-hectare site has earmarked for the venture in area of the SEZ earmarked for heavy industries. The Duqm refinery is slated to come into operation in the fourth quarter of 2017.

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