A consortium led by the local Gulf Petrochemical Services (GPS) has won a $320m contract to build a refined products pipeline linking Oman’s two northern cities of Muscat and Sohar.

The engineering, procurement and construction (EPC) deal was awarded by Orpic Logistics Company (OLC), a joint venture of state-owned Oman Oil Refineries & Petroleum Industries Company (Orpic) and Spain’s Compania Logistica de Hidrocarburos (CLH).

GPS will carry out the work with its Spanish bid partners, Abanita and Diseprosa.  

The deal was awarded after direct negotiations with contractors. Talks took place after OLC asked bidders to resubmit commercial proposals, causing two companies to drop out of the tender.

OLC held post-tender clarification meetings for bids led by India’s Essar, GPS and Egypt-based Petrojet, according to sources close to the bidding process.

The firm also signed a financing agreement covering 70 per cent of the project with Oman-based Ahli Bank and Bahrain’s Ahli United Bank.

Orpic was initially planning to build the scheme in three phases, but the EPC work has now been combined into one package.

The scheme will connect the pipeline that links the Mina al-Fahal (Muscat) and Sohar refineries to an intermediate distribution and storage facility in Seeb near Muscat.

The pipeline is split into three sections: Mina al-Fahal to the Seeb terminal (42 kilometres); Seeb terminal to Muscat International airport (27km); and Sohar to the Seeb terminal (228km).

Muscat International will receive aviation fuel directly from the Seeb terminal, which will have the capacity to store 175,000 cubic metres of oil products.

The two-way multi-product pipeline is aimed at removing the need for Orpic to ship and truck refined products, thereby lowering costs and reducing traffic around Muscat. Heavy fuel tanker traffic in Muscat is expected to drop by 70 per cent after the project’s completion.

OLC is 60 per cent owned by Orpic, with CLH holding the remaining 40 per cent. Orpic’s parent group, Oman Oil Company (OOC), owns a 10 per cent stake in CLH.