Local Omani companies and small businesses can look forward to subcontracts worth at least $1 billion from international contractors undertaking the construction of the Duqm Refinery project in the Special Economic Zone (SEZ) at Duqm.
The Engineering — Procurement — Construction (EPC) of the mammoth project, valued at $5.75 billion, is being shared out among a trio of international consortiums, each shouldering a distinct package of works. With each of the consortiums pledging to outsource a minimum 20 per cent of their contract value to local Omani businesses, a bonanza in subcontracts worth in excess of $1 billion is potentially up for grabs, according to project officials.
On Sunday, hundreds of Omani entrepreneurs and small business owners converged on the Oman Convention & Exhibition Centre to register for a plethora of business, as well as employment opportunities stemming from the implementation of Duqm Refinery — a 230,000 barrels per day capacity project. Total investment in the giant scheme, jointly owned by Oman Oil Company and Kuwait Petroleum International, is estimated at $7 billion.
In line with its In-Country Value (ICV) objectives — part of a national initiative to prioritise opportunities for local small and medium businesses (SMEs) and Local Community Contractors (LCCs) — Duqm Refinery & Petrochemicals Limited, the project company, has instructed the three main contractors to set aside a sizable chunk of subcontracting and procurement opportunities to local Omani firms.
Under these guidelines, the main contractors are required to allocate at least 10 per cent of their contract value for purchases and services from SMEs registered with the Joint Supplier Registration System (JSRS) — an ICV initiative of the Ministry of Oil & Gas and leading oilfield operators. Additionally, 20 per cent of the project value has been reserved for procurements of locally sourced ‘Made in Oman’ goods. Contractors are also required to achieve a 10 per cent Omanisation target at some functional levels.
Speaking to the Observer, Salim bin Nasser al Aufi, Under-Secretary of the Ministry of Oil & Gas, said contractors of oilfield projects have begun to take seriously their commitments under ICV.
“I think ICV is going in the right direction. There is more recognition for ICV; the process is becoming more and more familiar with the contractors. They know what the government wants and the different pillars we are using with regard to localisation efforts, and so on.”
For example, Omanisation should no longer simply be a numerical commitment on the part of contractors, said Al Aufi. On the contrary, Omanisation should be qualitative as well, with commitments in the form of positions, payroll percentages and so. Besides, contractors are also obligated to patronise locally manufactured goods and services, he stated.
“ICV is becoming more and more accepted and known to a lot of the contractors. Everybody has some element of ICV in their contracts and programmes,” Al Aufi added.
The joint venture of Técnicas Reunidas SA and Daewoo Engineering & Construction Co Ltd, which is executing EPC Package 1 (Process Units), has identified an array of business opportunities that it says it wants to outsource to local firms. The list includes: maintenance services, equipment and vehicle hire, logistics, provision of potable water, cable laying, supply of manpower, third party inspection, and fabrication and installation.
Likewise, the partnership of Petrofac International and Samsung Engineering, which is implementing EPC Package 2 (Utilities and Offsites), has invited local firms and SMEs to register for a wide swathe of business opportunities expected to materialise over the 2019-2020 timeframe. The list includes: painting and cathodic protection services, rentals of mobile cranes and trailers, provision of fuel tankers, portable water and sewage services, scaffolding and NDT services, and excavation works.
Similarly, the JV of Saipen Spa and CB&I, awarded the EPC Package 3 (Offsite Facilities), has noted the need for, among other services, supply of pipes and fittings, scaffolding, firefighting equipment, diesel generators, fuel and paints, catering and water services, medical and travel, and so on.
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