US consultancy KBC Advanced Technologies is conducting a feasibility study for a new multibillion-dollar Oman/UAE joint venture refining and petrochemicals complex at Duqm in Oman.

“I can confirm that KBC’s Walton on Thames UK office is executing a feasibility study,” says Ian Nicholas, Middle East operations director at KBC.

Although the study was awarded in early 2010, it is yet to be announced by the partners behind the scheme, UAE investment fund International Petroleum Investment Company (Ipic) and the local Oman Oil Company (OOC), or by KBC.

The study has been broken down into two phases: A market study on demand for fuel and petrochemical products; and a technical and commercial study on the feasibility of a new refinery to produce fuel products at Duqm. This will be followed by an evaluation of new units to produce basic petrochemicals based on fuel derivatives, the aromatic and olefins groups.

KBC completed the first phase of the study early in the third quarter of 2010. and its findings will be presented to OOC’s board of directors in late August, Nicholas says. OOC has already commissioned KBC to start the second phase of the study, he adds.

The size of the refinery and the configuration of its output will be decided once both studies have been completed. Earlier studies had proposed a refinery with a capacity of up to 400,000 barrels a day at an overall cost of about $10bn.

“In the event that a petrochemicals project adds value, then the configuration will be sized to be world-scale, with the refinery sized for a corresponding crude rate,” Nicholas says.

Integrated refineries and petrochemicals complexes have become increasingly popular in the Middle East over the past five years as supplies of natural gas, the region’s traditional low-cost feedstock for petrochemicals, have dried up.

Massive new petrochemicals production complexes integrated with huge export refineries cut out costs related to transporting feedstocks. Such complexes, while costing tens of billions of dollars to build and operate, create economies of scale, with large, efficient plants producing petrochemicals at a lower overall cost than smaller, less efficient facilities.

Ipic, which signed a memorandum of understanding to develop the Duqm complex with OOC in October 2009, is also a partner in Abu Dhabi National Chemicals Company (Chemaweyaat), which plans to build a giant petrochemicals complex in Abu Dhabi’s Western Region (MEED 25:7:2010).

The first project on the scheme, being developed by a wholly owned subsidiary, Tacaamol, will be fed with naphtha from the nearby Ruwais refinery complex and cost about $10bn to build.