Financial close of Duqm Refinery – Oman’s largest single-phase project – is likely to be delayed by six to seven months, according to sources close to the scheme.
The 230,000 barrel-a-day (b/d) refinery, which awarded all three engineering, procurement and construction (EPC) packages in August had earlier set November as the target to reach financial close.
It is understood that the refinery has yet to finalise the offtake agreement, which is one of the reasons for the delay.
Duqm Refinery is owned by Oman Oil Company and Kuwait Petroleum International, which replaced Abu Dhabi’s International Petroleum Investment Company as the joint venture partner last year.
A source involved in financing the scheme says that the refinery project modelled on the partly Kuwaiti-owned $9bn Nghi Son refinery in Vietnam is currently in discussions with export credit financing agencies (ECAs) but have yet to talk to commercial banks.
Duqm Refinery was not available for comment.
MEED reported earlier that partners on the refinery scheme were looking to add a third partner and had been in talks with South Korea’s SK Engineering to offload a 20 per cent stake.
Access to finance has been challenging for Oman, whose credit rating was reduced to junk status by ratings agency Standard & Poor’s in May.
Duqm Refinery awarded package one to develop oil processing facilities to South Korea’s Daewoo and Spain’s Tecnicas Reunidas. Package two went to UK’s Petrofac and South Korea’s Samsung Engineering, while the third package for construction of storage tanks in Ras Markaz, as well as a product export terminal, was awarded to Italy’s Saipem. The deals are worth a collective $5bn.
The refinery will receive 70 per cent of its crude feedstock from Kuwait, and the remainder from local fields.
Once commissioned, it will produce diesel, jet fuel, naphtha, liquefied petroleum gas, sulphur and pet coke as its primary products, which will be traded from the adjacent Duqm port.
The sultanate is developing Duqm as well as port cities such as Sohar and Salalah as part of its efforts to develop its economy away from upstream hydrocarbon revenues.