Oman Oil Refineries and Petroleum Industries Company’s (Orpic’s) multibillion-dollar flagship projects in Sohar are in line for completion by their target dates, according to one of the firm’s senior executives.

Work on the $2.7bn Sohar Refinery Improvement Project, which is scheduled for commissioning in November or December 2016, has achieved an overall progress of 97 per cent, said Gabor Kenessey, general manager for supply chain management at Orpic.

“We will have achieved 41 million man hours by the end of October,” he added, speaking at the Argus Middle East Gulf & Indian Ocean Oil Products Conference in Dubai on 24-25 October.

The $320m Muscat-Sohar Pipeline Project, meanwhile, has progressed 69 per cent on the back of 6 million man-hours. The 200-kilometre pipeline will connect the Mina al-Fahal refinery in Muscat to the Sohar refinery in the north.

“Sixty-five per cent of the overall domestic supply is actually originating from the Mina al-Fahal refinery,” Kenessey explained. “There’s also a new distribution terminal being built at Al-Jifnain.”

Commissioning of the $80m Al-Jifnain fuel facility, which is expected to meet half of Oman’s fuel requirements, will begin next year.

Meanwhile, the $6.5bn Liwa Plastics Industrial Complex (LPIC), the biggest scheme undertaken by Orpic, has progressed by about 3.2 per cent. The main contracts on the project, which is set to enhance fuel and plastics production in the sultanate, were awarded in December 2015.

The foundation stone of the scheme was laid on 17 October 2016, and work is set to commence by early 2017. Work on LPIC was earlier announced to be completed in the first quarter of 2019, but Kenessey clarified that the new target is 2020.

There are no further delays to be anticipated, Kenessey stressed, even as Oman’s deficit for the first eight months of 2016 was higher than forecast, as the projects were financed without government assistance.

“All of the schemes were financed by consortiums and all of the finances were secured without any government guarantee. So it’s purely a business case and the project was attractive enough to attract investors,” he said.

Feedstock supplies are also secure and unlikely to cause operational disruption, Kenessey added. “As part of the lenders package and project development, there are already signed feedstock supply agreements for all the projects we have.”

Iranian gas

Oman has looked at Iran’s large gas reserves as a possible source of feedstock for its petrochemicals projects. However, work on the $1bn pipeline between the two countries has been delayed and proven expensive as Iran has to negotiate a route that bypasses the UAE’s waters.

Kenessey, however, did not rule out using Iranian natural gas in Orpic refineries.

“I’ve built on it as an upside potential rather than a solid business case at the moment,” he told MEED.

The Muscat-Sohar Pipeline Project, which will come online  by the middle of 2017, will create several efficiencies within the country’s downstream sector.

“The benefits will primarily be for the local communities and the government itself. The seaborne product movement will be replaced by more efficient transportation, so this is the basis of the business case,” Kenessey said. “However, the benefits are mostly on the safety and environment side. The truck movement in the inner-city of Muscat will disappear, with all the safety and environmental concerns.

“Sustainable supply will be ensured. It is not sustainable to have the inner Muscat supply for the majority of the demand in Oman,” he added.

When the pipeline work is completed, Orpic will save about $20m annually, as transportation will no longer be required.

Kenessey stressed that cost benefits are secondary to the sustainability efficiencies the project will achieve.

“It has a viable business case, but I outweigh the soft benefits compared with the financial cost,” he added.