Kuwait is looking to bring in a new partner for the Duqm refinery as it looks to increase its stake in Oman’s largest ever single-phase project, according to sources close to the scheme.

Kuwait Petroleum International (KPI), the overseas investment arm of state-run Kuwait Petroleum Corporation, signed a joint venture agreement with Oman Oil Company to develop the 230,000 barrel-a-day refinery.

The Kuwaiti partner stepped in to take the place of Abu Dhabi-based International Petroleum Investment Company, which exited the scheme in 2016, citing a change in strategy.

KPI has been in discussions with contractors from South Korea to potentially take 20 per cent of the stake, with Kuwait and Oman holding 40 per cent each, according to a source.

This move would tilt control of the refinery in favour of Kuwait.

MEED reported that Oman was looking to add more investors to the estimated $7bn project, which has yet to reach financial close.

The project owner, which was due to award all three tendered packages by the end of May, has pushed the award date to September, with the possibility of further delays.

The reason for the delay is understood to be ongoing negotiations by KPI to bring in another partner.

MEED reported that a team of South Korea’s Daewoo and Spain’s Tecnicas Reunidas is the frontrunner for package one, which includes oil processing facilities. A consortium of the UK’s Petrofac, Japan’s Chiyoda Corporation and South Korea’s Samsung Engineering is the favourite for package two, which covers facilities, utilities tankage and buildings.

Italy’s Saipem has emerged as the frontrunner on package three, which includes eight storage units at the world’s largest crude storage tank farm at Ras Markaz.

MEED understands the choice of front-runners from various nationalities is to source as much external credit financing as possible from the firms’ host countries.

Oman’s low credit rating – reduced to junk status by US ratings agency Standard & Poor’s – has made access to finance challenging for the sultanate.

The refinery at Duqm will receive 70 per cent of its crude from Kuwait and the remainder from Oman.

Once commissioned, it will 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 sultanate’s 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.