MUSCAT, MAY 12 – Having signed in place agreements for the implementation of the $7 billion Duqm Refinery project, the joint venture partners — Oman Oil Company and Kuwait Petroleum International (KPI) — are now preparing the groundwork for the development of Phase 2 of this signature venture, envisioning an equally an ambitious downstream petrochemical complex. According to a top official of Oman Oil Company, the wholly government owned energy investment vehicle, an award for the design of the multi-billion dollar petchem complex is expected to be announced in the coming months.
“The feasibility study covering the scope of the petchem complex has been completed and was recently discussed by the shareholders,” said Hilal Ali al Kharusi (pictured), Executive Managing Director of Oman Oil Duqm Development Company, one of the four verticals of the restructured Oman Oil Group. “There is common agreement that the proposed design is the best, as it takes into account the technical and commercial aspects of the complex. We are now moving into the design phase with an award for the design due to be announced, hopefully, within the next 2-3 months,” Al Kharusi told the Observer.
As many as 7-8 petrochemical plants, operating downstream of the refinery, are envisioned in the second phase of the development of an anchor refining and petrochemicals cluster in the Special Economic Zone (SEZ) at Duqm, according to the official. Output from these plants will be offered to investors — local and international — as feedstock for value-adding chemical industries. “The majority of the proposed plants — say 5 or 6 of them — will be implemented by us because the feedstock coming from the steam cracker of the Duqm Refinery project cannot be easily exported and must be consumed locally. The other three plants will however be opened up for investment,” said Al Kharusi.
Total investment in Phase 2 of the Duqm refining and petrochemical complex is estimated at a ballpark $8 -9 billion, underscoring the ambitious scale of the initiative. Commenting on the provisional timeline for the implementation of this phase, Al Kharusi explained: “The design phase will take about, say 18 months, before we move into the financing stage, which will take another 12-18 months, assuming all goes well. So we are looking at another 3- 4 years before construction can commence. By then, the refinery would be complete and commissioned. So we foresee a 2-3 year gap between the start-up of the refinery and the commissioning of the petchem complex.” Oman Oil Company and Kuwait Petroleum International are presently the only shareholders in the entity that will implement the petchem complex, although third-party investment will be welcome as well, he noted.
Output from the 230,000 bpd capacity refinery will include Diesel, Jet fuel, Naphtha, LPG, Sulphur and Pet coke as its primary products. While the refined products will be marketed internationally by the marketing arms of Oman Oil Co and KPI, naphtha and other products from the steam cracker are proposed to be processed into a wide range of commercially valuable petrochemicals and intermediate products for further value addition. Around 10 different types of petrochemicals and intermediate products will be churned out by the petrochemicals cluster when it is fully operational by around 2014/2025. The list includes Ethylene Glycols, High Density PE (HDPE), Oxo chemicals, Polypropylene, Butadiene, MTBE and Aromatics.