Oman prepares to award key pipeline project

04 December 2014

Client in direct negotiations with contractors after tender breaks down

Oman is nearing the award of the contract to build a refined products pipeline linking Oman’s two main northern cities, as the client enters into direct negotiations with contractors.

The estimated $300m Muscat-Sohar pipeline is being developed 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).

OLC received engineering, procurement and construction (EPC) bids from five consortiums led by respectively by Indian groups Essar, Larsen & Toubro and Punj Lloyd, Oman’s Gulf Petrochemical Services & Trading (GPS) and Egypt-based Petrojet.

According to two sources close to the bidding process, the client then asked the contractors to resubmit commercial proposals resulting in one or more companies dropping out of the tender.

OLC has held post-tender clarification meetings and is now thought to be in direct negotiations with consortiums including:

  • Essar (India) / San Jose Group (Spain)
  • GPS (Oman) / The Oman Construction Company (Oman) / Avantea (Spain)
  • Petrojet (Egypt) / OHL Industrial (Spain)

The client is expected to make a decision on the EPC award in the coming weeks, according to the sources.

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

The scheme will connect the Mina al-Fahal (Muscat) and Sohar refineries with a 280-kilometre pipeline to an intermediate distribution and storage facility at Al-Jifnain near Muscat.

Muscat International airport will receive aviation fuel directly from Al-Jifnain, 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-tank truck 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.

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