Financing problems force Muscat to delay Duqm refinery

07 November 2008
Oman has placed its ambitious integrated Duqm refinery and petrochemicals complex on hold after raising doubts over securing vital project finance for the deal.

Oil & Gas Minister Mohammad bin Hamad al-Rumhy tells MEED that with the progress of the facility largely dependent on private sector involvement, there is likely to be a significant delay.

“There is only so much we can do,” says Al-Ruhmy. “If we cannot borrow the money we need for a project like Duqm, then it will be difficult to go ahead with
this project.”

Oman’s favoured financing alternative is for the state-run Oman Oil Company (OOC) to link up with international partners to help fund the increased costs.

The complex has been under study for some time, with an original configuration to handle about 300,000 barrels-a-day (b/d) of heavy Omani crude oil along with a polypropylene plant with a capacity of around 1.2 million tonnes a year (MEED 10:2:08).

The long-running feasibility study being conducted by the UK office of the US’ Jacobs Engineering was completed earlier this year. It is understood that the initial planned crude capacity could be lowered to as little as 150,000 b/d as a result of the study.

Rising material and construction costs have undermined the economic case for the facility, but al-Ruhmy says it still remains competitive. “We were expecting to proceed with Duqm because it is an important project for Oman, but we need to balance that with the problems of the economy and lower oil prices at the moment.”

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