Oman Oil Company (OOC)has signed a shareholders' agreement with South Korea's LG International (LGI) and Iran's National Petrochemical Company (NPC)for a $300 million petrochemicals project in the Sohar industrial area. OOC will take a 33.4 per cent stake in the project and the foreign partners will each own 33.3 per cent.
The proposed plant will produce 300,000 tonnes a year (t/y) of ethylene dichloride (EDC) and 240,000 t/y of caustic soda. The project will be 70 per cent debt-financed and financial close is slated for the fourth quarter of 2005, with construction beginning in early 2006 and commissioning due in the second quarter of 2008. The engineering, procurement and construction (EPC) contract is expected to be carried out by a consortium led by LGI and including LG Engineering & Construction. A long-term ethylene feedstock agreement has been reached with NPC as ethylene from the Sohar olefins project, being promoted by OOC, the government and the US' Dow Chemical Company, will not be available for third-party use. NPC will also offtake 33.3 per cent of the plant's output while LGI will take 50 per cent and OOC the remaining 16.7 per cent. OOC also signed an agreement to acquire a 33 per cent stake in LG Energy, a subsidiary of the LG Group, which owns and operates a power plant in the Pyongtaek region of South Korea - the Omani company's first venture into the power sector. OOC and LG are already partners in the Oman Polypropyleneventure at Sohar, in which LG has a 20 per cent stake and will carry out the EPC contract (MEED 2:7:04). The sultanate's petrochemicals projects have a reputation for moving slowly, but several have made significant progress recently (MEED 15:10:04; 24:9:04; 27:8:04).