Stable outlook for Oman’s downstream sector

GlobalData Energy 18 December 2019 (Last Updated December 18th, 2019 11:29)

The biggest project under execution is Oman Oil Refineries & Petroleum Industries Company’s Liwa project.

Stable outlook for Oman’s downstream sector
Oman Oil Refineries & Petroleum Industries Company’s Liwa project

The outlook for Oman’s downstream oil and petrochemicals sector is looking stable, with a strong pipeline of planned future projects and the execution of several major projects underway.

The biggest project under execution in the sector is Oman Oil Refineries & Petroleum Industries Company’s (Orpic’s) Liwa steam cracker and polyethylene plant project.

Contracts for the project worth $4.5bn were awarded in 2015, and in October, MEED reported that the polyethylene and polypropylene units had been completed.

The units are part of the $888m plastics package, known as EPC 2, which was awarded to Italy’s Maire Tecnimont in December 2015.

Other packages that are under execution include:

  • EPC 1 – Steam cracker: CB&I (Netherlands-based) / CTCI Corporation (Taiwan)
  • EPC 3 – Natural gas liquids (NGL) extraction: GS Engineering & Construction (South Korea) / Mitsui (Japan)
  • EPC 4 – NGL pipeline: Punj Lloyd (India)

The downstream megaproject was originally expected to be completed in 2018, but it has experienced delays.

It is also known as the integrated Liwa plastics project and will be integrated with the existing Sohar refinery to produce polyethylene, polypropylene and benzene.

The Liwa plastics project is expected to expand fuel and plastics production capacity in Oman.

The steam cracker will be fed by a combination of NGL, refined dry gas, mixed liquid petroleum gas and condensate. Any ethane and propane produced during the cracking process will be recycled back into the furnace.

When fully operational, it is expected to operate for 8,000 hours a year, with about 700 hours devoted to maintenance.

Duqm refinery

The second-most valuable downstream project under execution in Oman is the $3.6bn Duqm refinery. An $84m site preparation contract was awarded to Galfar Engineering & Contracting in 2015 for the project. This was completed in August 2016.

The three main contracts were then awarded in 2017. The downstream megaproject is now thought to be about 30 per cent complete.

Other projects in the sector that are currently under execution include the $690m Duqm sebacic acid plant and the $443m Luban ammonia plant project.

Market overview

The total value of all major downstream oil and petrochemical projects under execution in Oman is $14bn, according to the project tracking service MEED Projects.

Planned projects that are yet to enter the execution phase are estimated to be worth a total of $34.3bn.

This includes projects worth $11.4bn in the front-end engineering and design (feed) phase and projects worth $22.6bn in the study phase.

There are two projects estimated to be worth a total of $345m that are in the bid evaluation phase.

These are the $150m Bisat oil processing plant and the $195m calcined petroleum coke plant.

The client on the Bisat oil processing plant is state-controlled Oman Oil Company Exploration & Production (OOCEP), while India’s Sanvira is behind the calcinated petroleum coke plant project, which will be located in the Sohar Free Zone.

Sanvira’s project is being developed in two phases, with 280,000 metric tonnes capacity in phase 1 and 160,000 metric tonnes capacity in phase 2.

Feed phase

The biggest project currently in the feed phase is the Duqm petrochemical complex, which is estimated to be worth $9bn.

Wood Group is responsible for the feed work on the megaproject and the main contracts are expected to be awarded in mid-2021.

The second-biggest project in the sector that is in the feed phase is an acetic acid plant with an estimated budget of $1bn, which is due to be built in the Special Economic Zone in Duqm.

The client on the project is a partnership between UK-based BP and Oman’s Oil & Gas Ministry.

Over 2019, this project has seen unexpected delays and it is uncertain when the initiation to bid on the main contract will be issued. It is not known why there have been delays.

Potential share sale

Earlier this month, Oman’s Minister of Oil and Gas Mohammed bin Hamad al-Rumhy said his ministry is considering selling a stake in Oman Oil Company (OOC) and Orpic.

He said the feasibility of the share sale would be explored in a study over 2020. The study will assess the viability of a stake sale either via an initial public offering (IPO) or the sale of a minority shareholding to a strategic partner, according to Al-Rumhy.

In November 2018, OOC and Orpic announced that they would merge their downstream businesses. This process is now almost complete, according to the minister.

It remains to be seen whether there will be a slowdown in downstream oil and petrochemical project activity as the Oil & Gas Ministry weighs its options with regard to the share sale.

With a relatively strong pipeline of future projects, at various stages of planning, Oman has the potential to sustain a stable level of project activity into the foreseeable future. 

This article is sourced from Power Technology sister publication www.meed.com, a leading source of high-value business intelligence and economic analysis about the Middle East and North Africa. To access more MEED content register for the 30-day Free Guest User Programme.