OMAN - The Refining Sector.

Oman has one refinery in the port of Mina Al Fahal, near Muscat, with a capacity of 85,000 b/d. Operated by Oman Refinery Co. (ORC), it is owned 99% by the Ministry of Oil and Gas and 1% by the Central Bank. The plant meets local demand for gasoline, jet fuel, gasoil/diesel, kerosene, LPG and bunker fuel. It is being upgraded and debottlenecked to produce unleaded gasoline and cleaner diesel. But its residual fuel oil, which is very heavy, is to be pumped by pipeline to Sohar where it will be turned into high quality gasoline by the complex refinery that will be on stream in the first half of 2006 (see below).

The refinery has an 18,000 b/d diesel hydro-desulphurisation (DHDS) unit installed last December by SK Engineering & Construction of South Korea, which has also built amine treating and sulphur recovery units and associated pumps and equipment. The FEED work for them was done by Halliburton KBR. These units process 50 parts per million sulphur-carrying diesel, producing pure sulphur used in a number of industries including petrochemicals. In the second phase of the upgrade, the plant will have a 10,000 b/d isomerisation unit licenced by UOP to produce unleaded gasoline. Under an EPC contract tendered in late 2003, the refinery will also have new condensate, export and storage facilities and associated utilities. The feedstock for the unit will come from a mixture of light naphtha being produced at the refinery and condensate supplied by Oman LNG. The FEED work for Phase-2 was done in 2003 by Granherne & Co. of the US.

The refinery was built at a cost of $107m by Mitsui Engineering and Shipbuilding Co., with Shell Int'l as project manager. It came on stream in 1982 with a capacity of 50,000 b/d. But initially it processed just 18,000 b/d of crude oil. It reached full capacity in 1984. In 1985, ORC decided to upgrade and expand the plant. A $24.4m contract was awarded to Mitsui to raise the capacity to 80,000 b/d and install a sulphur extraction unit. This was completed by end-1987. Capacity has since been raised to 85,000 b/d. Mitsui won a contract in Dec. 1992, worth OR13.8m, to install a continuous catalytic regeneration unit supplied by UOP, for the plant to produce unleaded gasoline for export to other GCC states. It was also to extend the period between maintenance shutdowns from once every two years to once every three or four years. The project was completed at end-1993.

The refinery was shut down in the first quarter of 2001 for a 120-day maintenance work and revamp. Modifications were done to its units in order to improve operations. ORC bought gasoil and unleaded mogas from Glencore and Vitol to meet local requirements during the shut-down (see background in Vol. 58, DT No. 6).

A 24-inch, 260-km mixed feedstock pipeline from Mina Al Fahal to the Sohar refinery is to be built with a capacity of 116,000 b/d to carry heavy crude oil and residual fuel oil. The FEED work for the $200m project was done by ILF & Partners of Germany. The PMC is Mott MacDonald. This will include a pressure reduction terminal, pumping stations, SCADA controls, and telecommunications and lead detection systems. OGC will be operating the pipeline.

The Sohar refinery project, to cost about $1.1 bn, has been delayed for years due to financing problems and hesitation about its ownership and location (see Vol. 58, DT No. 6). ORC's unit Sohar Refinery Co. (SRC) finally secured the financing from an international syndication under an agreement signed last Dec. 12 in London. The EPC contractor for the 125,000 b/d refinery is JGC Corp. which did the FEED work. To be on stream in the first half of 2006, this will process into high-octane unleaded gasoline the residual fuel surplus from Mina Al Fahal, as well as heavy crude oils into low-sulphur gasoil/diesel, jet fuel and LPG. UOP has done the basic engineering design for a residue fluid catalytic cracker. The refinery will have a topping plant, added to the list of units in late 2001 so the refinery can process crudes into its own long-residue streams, as well as an alkylation unit, gasoline and LPG treating units, a gasoil hydrotreater and a propylene recovery unit. The PMC is ABB Lummus Global of the US.

The propylene unit will feed a 340,000 t/y polypropylene plant to be built at the refinery complex as a JV, OPP, with OOC holding 60% and each of ABB Lummus Global and LG Int'l of South Korea having 20%. The $225m plant should be on stream in the first half of 2006. The latter two partners have the EPC contract to build and run the PP plant. OAPEC's Petroleum Investmets Corp (Apicorp) was in October 2003 contracted as as financial advisor for OPP. It will soon lead the mandate for loans from local and international banks. ABB and LG will market the PP, mainly in Asia.

Under a $45m contract signed in September 2003, LG-Caltex and LG Engineering & Construction, both affiliates of LG Int'l and LG Group, will operate and maintain the Sohar refinery for a period of seven years. The deal includes the training of Omani nationals. BP has the products' offtake contract signed with ORC. Together with Trafigura of the Netherlands, the UK major will take 80,000 b/d of the output to a blending plant being built in Dubai's Jebel Ali Free Zone. (BP used to provide ORC with technical assistance for years).

Shell Oman Marketing and ORC's own retail unit Al Maha are the main oil products retailers in Oman. Al Maha has expanded rapidly since late 2002, when its bought out BP's 49% stake in BP Oman involving 74 petrol stations and nine garages in the sultanate. But BP continued to run BP Oman for a year on a management contract. BP still has its own aviation fuelling and lubricants businesses in Oman.

A 250,000 t/y calcined coke plant, with the product used to make anodes for aluminium smelting, has been promoted since mid-1998 by Al Baraka Economic Consultancy which is a private Omani firm. It is to be built in Sohar near the refinery and aluminium smelter. Al Baraka has said it intends to lead a consortium that would own this project and should include an international technology provider and a machinery supplier. A detailed feasibility study on the project has been done.

Despite the fact that Muscat is insisting on having a smelter built at Sohar, however, the 500,000 t/y Aluminium Bahrain (Alba) has its own new 450,000 t/y calcined coke plant at its smelter complex. The plant has had a 200,000 t/y surplus for export. The Dubai Aluminium (Dubal), which has a 500,000 t/y smelter, expects a calcined coke plant to be built near its complex for local investors and Conoco of the US (now part of ConocoPhillips) - a leader in the coke business. The Sohar smelter would need 200,000 t/y of coke. Al Baraka argues that Qatar and Kuwait are planning to have their own smelters and would take its surplus coke. Original plans to have its plant on stream by April 2001, with construction to begin in early 1999, have been postponed and now the project depends on government guarantees that the planned smelter would buy its coke. The plant would cost about $110m.