MUSCAT, APRIL 28 – Countries in Europe, Far East and even Africa are seen as potential markets for the prodigious quantities of clean petroleum fuels that will be produced once the new Duqm Refinery comes on stream in 2021, according to a top official of the landmark project.
Jacobus Nieuwenhuijze, Acting CEO and Project Director, said Duqm’s geographical location overlooking the Indian Ocean offers strategic advantages in accessing key markets for the refined petroleum products that will begin flowing from the refinery in just over three years from now.
“The location of Duqm is absolutely fantastic in serving the East, West and Africa,” said Nieuwenhuijze. “We are looking at Africa in the future because, if you look at World Bank predictions for population growth in the continent, it is projected to rise from 2.5 billion to around 5 billion within 20 years. They will require fuel,” the official added in comments to journalists soon after joining dignitaries at ceremonies marking the groundbreaking at the site on Thursday of Oman’s single biggest energy investment.
Oman Oil Company (OOC), the energy investment arm of the Omani government, and Kuwait Petroleum International (KPI) are 50:50 partners in Duqm Refinery, which is being established with an investment of around $7 billion.
“We have been waiting for this moment for several years, and we are finally here!” said the Acting CEO, voicing his delight at the imminent start of construction work on the giant project. “The project will be implemented in accordance with not only Omani environmental regulations, but also in line with the Equator Principles prescribed by the World Bank,” he noted, referring to the risk management framework adopted by financial institution, for determining, assessing and managing environmental and social risk in project finance.
Commenting on the financing of the project, Nieuwenhuijze said around 50-60 per cent of the project finance would come from lenders. “We envisage having, by mid-June, all of the financing documents ready for signing,” he stated, citing the complexity of working with more than 20 international banks for the financial arrangements.
Ahead of the start of the physical construction of the mammoth scheme, which is coming up on a 900-hectare site at the Special Economic Zone in Duqm, contractors will drill as many as 2,000 bore holes to ensure that the plant is built on solid ground. In the meanwhile, engineering teams from the company as well as its consultants will pore over detailed engineering designs currently being finalized in three locations — Spain, Sharjah (UAE) and India.
Significantly, crude oil as feedstock for the 230,000 barrels per day (bpd) capacity Duqm Refinery will come from two principal sources: Kuwait (65 per cent) and Oman Export Blend (35 per cent). The feedstock will be supplied by ships that will discharge their cargoes at a new Crude Oil Storage Terminal under development at Ras Markaz just 80 km north of Duqm. Duqm Refinery is investing in storage capacity as well as a 28-inch pipeline that will link Ras Markaz with the refinery, the Acting CEO said.
Refined fuels for export will be pumped to a Liquid Terminal under construction 7 km away at Duqm Port.
“The SEZ Authority at Duqm (SEZAD) is providing us with
quay walls and jetties for the export of our refined products,” said Nieuwenhuijze.
“We will be building the loading arms, tanks for storage and other export facilities as part of our investments. A 7 km long pipeline will carry the clean fuels to the terminal for export into the international market via Duqm Port.”
Output from the refinery will be marketed internationally by the respective marketing arms of Oman Oil Company and Kuwait Petroleum International, he said.
Construction of the refinery project has been apportioned into three main Engineering-Procurement-Construction (EPC) packages as follows: (1) EPC 1 comprising process units — Joint venture of Tecnicas Reunidas SA & Daewoo Engineering & Construction Co Ltd (2).
EPC 2 comprising utilities and offsites — Joint venture of Petrofac International Limited & Samsung Engineering Co Ltd and (3) EPC 3 comprising offsite facilities — Saipem SpA.