Chiyoda withdraws from Sohar refinery

23 May 2003
Chiyoda Corporationhas withdrawn from the Japanese joint venture selected for the engineering, procurement and construction (EPC) contract on the Sohar refinery project, leaving JGC Corporationto carry out the contract on its own. JGC signed the $879 million contract with the client, Sohar Refinery Company, on 19 May. The JGC/Chiyoda joint venture was selected last October for the contract (MEED 25:10:02).

Chiyoda is understood to have withdrawn from the joint venture as a result of a high workload: in the sultanate, it is working with US-based Foster Wheeleron the estimated $600 million third train project at Sur. Within the venture for the refinery, Chiyoda had been due to undertake the construction portion, which will now be carried out by JGC.

The major units on the refinery will be a 116,000-barrel-a-day (b/d) atmospheric distillation unit, a reformed fluid catalytic cracker unit, a liquefied petroleum gas (LPG) Merox unit, desulphurisation unit and offsites and utilities. JGC, which also carried out the front-end engineering and design (FEED) package, is due to complete the EPC contract in the first half of 2006. The refinery will produce petrol, propylene, LPG, naphtha, kerosene, gas oil and fuel oil.

The next step in the project's implementation will be to achieve financial close on the development. A group of lead arrangers is expected to be mandated in mid-June to arrange the $1,230 million debt package, which will be made up of a commercial loan, a Nippon Export & Investment Insurance (Nexi)-backed tranche, and a loan from Japan Bank for International Co-operation (JBIC - see Banking & Finance).

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