The Italian export credit agency Sace has confirmed it has issued a guarantee in support of the upgrade of Sohar oil refinery in Oman.

The guarantee covers a $100m loan from UK bank HSBC and forms part of a $2.8bn financing signed in early May, as reported by MEED.

The Sace-covered loan will support a engineering, procurement and construction contract signed between Oman Oil Refineries and Petroleum Industries Company (Orpic) and Italian firms, which will supply equipment and machinery to the project.

A total of 21 local, regional and international banks participated in the project financing, including Korean ECAs Kexim and Ksure. It is one of the largest project financings signed to date in Oman.

The Sohar Refinery Improvement Project will help Orpic meet the growing demand for refined products. The expansion will also increase production of liquefied petroleum gas, naphtha, jet fuel, gasoline, diesel and propylene by approximately 70 per cent to meet growing local demand.

Orpic is also overseeing two other expansion projects. It is reviewing bids for financial advisers for the $2.6bn Liwa plastics petrochemicals plant. It is also looking to raise funding for a pipeline connecting Muscat to Sohar.