Offtake signed for Sohar fertiliser

19 April 2002

Sohar International Urea & Chemical Industries (SIUCI)has signed an offtake agreement with Transammoniaof the US for the entire output of urea from its proposed fertiliser plant. The agreement clears the way for the selection of an engineering, procurement and construction (EPC) contractor to build the complex. SIUCI, a subsidiary of the local Bahwan Trading Company (BTC), was established to manage the plant (MEED 5:4:01).

Three groups are competing for the work. They are Japan's Toyo Engineering Corporation; Germany's Krupp Uhde; and Italy's Snamprogetti, with Japan's Mitsubishi Heavy Industries. BTC, which expects to begin the commercial and legal review of the offers in May, plans to award the contract by late June. The company is also reviewing proposals from several firms to take on the role of project management consultant (PMC).

The estimated $550 million project, which is the biggest privately funded fertiliser project in the world, calls for the construction of a plant with a capacity to produce 3,500 tonnes a day (t/d) of urea from an ammonia output of 2,000 t/d. First production is expected by the end of 2005. A second phase of development, adding a further 2,000 t/d to the plant's ammonia capacity, is also envisaged. The US' Jacobs Engineeringcompleted the front-end engineering and design (FEED) studies.

Debt financing will account for 70 per cent of the total investment. BTC plans to appoint a lead arranging bank for the commercial debt facility once an EPC contractor has been selected. HSBC Investment Bankis the financial adviser (MEED 23:11:01).

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