Strategic projects to drive revenue growth for Oman’s OQ

Healthy returns: When operational, OQ’s Growth Projects will also fuel economic diversification and ICV, says Chairman

Five major ventures of OQ – the global integrated energy group of the Sultanate of Oman – will unlock a new phase of revenue growth for the company when they come into operation over the next two years.

Dubbed ‘Growth Projects’, they comprise the Liwa Plastic Industries Complex in Sohar, LPG and ammonia plants of OQ in Salalah, and a major crude oil terminal and greenfield refinery at Duqm – strategic ventures that have garnered investments totaling around $15 billion.

When operational, the OQ’s Growth Projects – distributed across the upstream, midstream and downstream segments of the Oil & Gas value chain - will also fuel the country’s economic diversification, said a key official of OQ Group.

“The Group is nearing the completion of key strategic projects, namely Liwa Plastic Industries Complex, OQ LPG, OQ Ammonia, and Bisat B and the commercial operations start to kick-off. These operations will open wider prospects that will increase returns on Group investments, as well as contribute towards supporting the government's economic diversification policies and enhance In-Country Value,” stated Mulham Basheer al Jarf, Chairman – OQ Group, in a newly released report of OQ’s performance for the first half of this year.

OQ Group, which is part of Oman Investment Authority (OIA), owns and operates businesses across the Oil & Gas value chain. Included in its vast portfolio are equity interests in a sizable number of operated and non-operated oil and gas fields in the Sultanate of Oman and abroad, refining and petrochemicals plants, specialty chemical projects overseas, and the country’s gas transportation network. Its assets are valued at a total of $27.6 billion (as of June 30, 2021).

The largest of OQ’s Growth Projects, set up with an investment of around $6.7 billion, is the Liwa Plastics Industries Complex (LPIC) in Sohar Industrial Port. A wholly-owned petrochemical complex of OQ Group, LPIC comprises of a polypropylene plant, producing 300,000 tonnes per year, and two polyethylene plants, HDPE and LLDPE producing 880,000 tonnes per year, “marking a breakthrough in polyethylene's novel production”, the group’s mid-year report said.

Progress on the construction of the giant scheme has reached the 99.9 per cent mark, with “critical milestones” achieved in its operationalisation during the first half of this year. Completion of the polymer plants’ performance testing will pave the way for the facility’s initial acceptance, OQ stated.

In Duqm, construction work on OQ8, a greenfield refinery being established by a joint venture of OQ and Kuwait Petroleum International (KPI), has reached the 84.3 per cent mark. When commissioned, the refinery will process around 230,000 barrels of crude oil per day. Primary refined products will include diesel, jet fuel, naphtha and LPG, OQ said, adding that initial acceptance is slated during Q2 2023.

Also in Duqm, a key construction milestone in the delivery of the first phase of a massive crude oil hub, located at Ras Markaz near Duqm, is slated during the first quarter of 2022.

The giant storage terminal is being developed by Oman Tank Terminal Company (OTTCO), a wholly owned entity of OQ Group. Around 25 million barrels of storage capacity is being developed in the first phase, which will include 5.2 million barrels for crude earmarked as feedstock for the OQ8 refinery in Duqm. Overall progress in the delivery of Phase 1 is at the 70.4 per cent level, with initial acceptance expected in Q1 2022.

In Salalah Free Zone, adjoining the Port of Salalah, OQ is preparing to bring into full-fledged operation two key ventures. The first of the pair, OQ LPG, builds on the Salalah LPG extraction plant, storage tanks, shipping facilities and interconnected pipeline system. Efforts are currently focused on achieving the “completion of the commissioning stage and on-spec production of all its three products (Propane, Butane and Condensate),” said OQ. In June, the project produced its maiden output of propane and butane, each of 5000 metric tonnes.

Also in Salalah, OQ is close to completing work on its 1,000 metric tonnes per day capacity ammonia plant, which is integrated with an existing 1 million tonnes per year capacity methanol project. Progress on the ammonia plant has reached the 95.5 per cent mark.

Ammonia from the plant can either be used as raw material in the manufacture of fertilizers or as an intermediate chemical in the production of resins, synthetic fibres and polyurethanes, among other applications, OQ added.