Duqm Refinery, Oman’s largest single-phase project, is expected to reach financial close in November, according to Isam al-Zadjali, the chief executive of Oman Oil Company (OOC), which is one of the co-owners of the project.

Al-Zadjali said that the 230,000 barrel-a-day refinery will award main contracts on all three packages in the next two weeks.

“In two weeks, we’ll announce the winners of the tender,” he said.

“After that, we’ll discuss financial arrangements. Financial close is expected after Oman’s National Day in November and construction will begin immediately,” he added.

The main refinery contracts were expected to be awarded by the end of June. The awards have been delayed as joint venture partner Kuwait Petroleum International was said to be looking to increase its stake in the project.

MEED previously reported that a team of South Korea’s Daewoo and Spain’s Tecnicas Reunidas was the frontrunner for package one, which includes oil processing facilities. A consortium of the UK’s Petrofac, Japan’s Chiyoda Corporation and South Korea’s Samsung Engineering is the favourite for package two, which covers facilities, utilities tankage and buildings.

Italy’s Saipem has emerged as the frontrunner on package three, which includes eight storage units at the world’s largest crude storage tank farm at Ras Markaz.

The emergence of front-runners from various countries is to source as much export credit financing as possible from the firms’ host countries, according to sources close to the scheme.

Oman’s low credit rating – reduced to junk status in May by US ratings agency Standard & Poor’s – has made access to finance challenging for the sultanate.

The refinery at Duqm will receive 70 per cent of its crude oil from Kuwait and the remainder from Oman.

Once commissioned, it will produce diesel, jet fuel, naphtha, liquefied petroleum gas, sulphur and pet coke as its primary products, to be traded from the adjacent port at Duqm.

The project to build the refinery at Duqm is part of the sultanate’s efforts to diversify its economy by developing the central Omani town as an energy and logistics hub. Similar efforts are also underway in the port towns of Sohar and Salalah.