Recovering oil prices have helped the highest-earning oil and gas companies recover from the pandemic. Credit: Dabarti CGI/Shutterstock.

The move comes Muscat suspends design work on its proposed Duqm petrochemicals project

Oman’s state energy holding company OQ is studying the prospect of building a new petrochemicals plant in Duqm, following the November announcement of suspension of front-end engineering and design (feed) work on its proposed Duqm Petrochemicals project in the sultanate.

OQ has been evaluating strategies for a potential petrochemicals producing plant in Duqm by itself for “quite some time now”, according to sources.

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UK-headquartered Wood Group has been hired by OQ as a consultant to undertake study work for the potential petrochemical project, one source said.

Wood had also performed the feed work on the estimated $7bn Duqm Petrochemicals project, while Australian firm Worley is the project management consultant (PMC) supporting Wood during the feed phase.

OQ is “most likely settled” on Duqm as the location for the potential new project, due to the advantage of proximity to the upcoming Duqm Refinery complex as the main feedstock source, another source said.

Being early in the study phase, the potential project’s output capacity is yet to be decided, the second source said.

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OQ and Duqm Refinery & Petrochemical Industries Company (DRPIC) did not respond to MEED’s request for comment on the information.

Duqm Petrochemicals on hold

In a statement on 3 November, DRPIC said it is seeking to assess the impact of Covid-19 on the Duqm Petrochemicals project, as well as on the company’s business.

DRPIC is a 50:50 joint venture of state energy companies Oman Oil Company (OOC), now a subsidiary of state energy holding company OQ, and Kuwait Petroleum International (KPI).

DRPIC is the operator of both the Duqm Refinery and Duqm Petrochemicals projects, which were originally envisaged to be developed as an integrated downstream complex.

DRPIC’s board of directors concluded that “the suspension of feed work on the project is in the interest of the company during a time of unprecedented global economic uncertainty due to the impact of the Covid-19 pandemic, depressed demand and highly volatile commodity prices”.

“The shareholders intend to reassess the project, taking into account the current challenging global market environment and the importance of seeking opportunities to enhance the value of the project,” the statement, carried by Oman News Agency on 3 November, said.

DRPIC’s shareholders had intended to reach the final investment decision on the project in 2021, with the complex scheduled to be commissioned in 2025.

In late September, MEED reported that contractors had submitted documents for the first stage of the prequalification (PQ) process for the engineering, procurement and construction (EPC) works on the Duqm Petrochemicals project.

The PQ exercise was planned as a two-stage process, with DRPIC issuing the PQ tender to about three dozen contractors on 15 September.

The original plan for the Duqm Petrochemicals project sees it centred on a mixed-feed steam cracker with a capacity to produce 1.6 million tonnes a year (t/y) of ethylene.

The planned project comprises a polypropylene (PP) plant, with a capacity of 280,000 t/y, and a high-density polyethylene (HDPE) plant, with an output potential of 480,000 t/y.

The Duqm Petrochemicals complex was also to include an aromatics plant and a polypropylene plant, as well as storage facilities for naphtha and liquefied petroleum gas.

Meanwhile, DRPIC on 3 November also announced that EPC works on its estimated $7bn Duqm Refinery project were continuing as per schedule, with overall progress standing at 72 per cent.

This article is published by MEED, the world’s leading source of business intelligence about the Middle East. MEED provides exclusive news, data and analysis on the Middle East every day. For access to MEED’s Middle East business intelligence, subscribe here