Omans low credit rating has made access to finance challenging
Contract awards on all packages of the Duqm refinery, Omans largest single-phase project, are likely to be delayed until after September, as the project faces financing issues, according to sources close to the scheme.
MEED reported that the award of deals was scheduled to take place in May, after the final investment decision was ratified by Kuwaits Supreme Council of Energy.
Kuwait Petroleum International signed a joint venture agreement with Oman Oil Company (OOC) to develop the multibillion-dollar project after Abu-Dhabi-based International Petroleum Investment Company (Ipic) exited the scheme in 2016.
However, Omans low credit rating reduced to junk status by US ratings agency Standard & Poors has made access to finance challenging for the sultanate. MEED reported that Duqm Refinery was looking to involve more partners, possibly offtakers from East Asia, to bring in finance to the project. Duqm Refinery was also looking to tap into export credit financing from Asian and European institutions to develop the project.
MEED reported that a team of South Koreas Daewoo and Spains Tecnicas Reunidas is the frontrunner for package one, which includes oil processing facilities. A consortium of the UKs Petrofac, Japans Chiyoda Corporation and South Koreas Samsung Engineering is favourite to be awarded package two, which covers facilities, utilities tankage and buildings.
Italys Saipem has emerged as the frontrunner on package three, which includes eight storage units at the worlds largest crude storage tank farm at Ras Markaz.
The groups that bid for the oil processing facilities package are understood to be:
- CB&I (Netherlands-based) / CTCI (Taiwan)
- JGC (Japan) / GS Engineering & Construction (South Korea) / Saipem (Italy)
- Petrofac (UK) / Samsung Engineering (South Korea) / Chiyoda (Japan)
- Tecnicas Reunidas (Spain) / Daewoo Engineering & Construction (South Korea)
Bidders for the second package, covering facilities, utilities tankage and buildings that will support the process, are understood to be:
- CB&I / CTCI
- Hyundai Engineering & Construction (South Korea) / Hyundai Engineering (South Korea) / Itochu (Japan)
- JGC / GS Engineering & Construction / Saipem
- Petrofac / Samsung Engineering
- Tecnicas Reunidas / Daewoo Engineering & Construction
Bidders for the third package, which covers offsite facilities, are:
- Tecnicas Reunidas / Daewoo
- Petrofac / Samsung Engineering
- Rotary Engineering (Singapore)
- Kentz (Ireland/Canada)
The refinery at Duqm will receive 70 per cent of its crude from Kuwait and the remainder from Oman.
Once commissioned, the refinery is set to produce diesel, jet fuel, naphtha, liquefied petroleum gas, sulphur and pet coke as its primary products, to be traded from the adjacent port at Duqm.
The project to build the refinery at Duqm is part of the sultanates efforts to diversify its economy by developing the central Omani town as an energy and logistics hub. Similar efforts are also under way at the port towns of Sohar and Salalah.
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