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OMAN - The Refining Sector.

Oman has one refinery in the port town of Mina Al Fahal, near the capital Muscat, with a capacity of 85,000 b/d. Operated by Oman Refinery Co. (ORC), it is owned 99% by the Ministry of Petroleum and Gas and 1% by the Central Bank. The plant meets local demand for gasoline, jet fuel, gasoil/diesel, kerosene, LPG and bunker fuel. Its expansion is ruled out due to environmental considerations. Its residual fuel, which is very heavy, is to be turned into high quality gasoline by the planned complex refinery at Sohar (see below).

BP, which operates petrol stations in Oman, has provided technology support for ORC under a contract renewed since July 1996. The plant had been managed by Ashland Petroleum, a JV between Caltex, Bermuda-based Transworld Oil and OOC. In December 1993, the government said ORC would be included in privatisation plans under a proposal by the State Consultative Council. But there have been no further indications on this matter.

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 gas oil and unleaded mogas from Glencore and Vitol to meet local requirements during the shut-down.

The refinery is to have a 15,000 b/d diesel hydro-desulphurisation (DHDS) unit, amine treating and sulphur recovery units and associated pumps and equipment. The FEED work for them was done by Halliburton KBR. These units will process 50 parts per million sulphur-carrying diesel, producing pure sulphur, which can then be used in a number of industries including petrochemicals. Bids for the $25-30m contract were made on Nov. 5, 2001 by Technip, Tecnimont, Larsen & Toubro of India, Krupp Uhde with the local Al Hassan Engineering, SK Engineering & Construction of South Korea, and Sharjah-based Petrofac Int'l with the local Galfar Engineering & Contracting. The EPC contract was to be awarded in early 2002.

Shell and BP are the main oil products retailers in Oman. But ORC's own retail network, Al Maha, is expanding, with its first petrol station, opened at end-1994.

The new Sohar refinery project, to cost about $900m, has been delayed for years due to financing problems and hesitation about its ownership and location. In early 1996, it was proposed to be in Salalah in the south as a $1 bn build-operate-transfer (BOT) venture and be on stream by 2000. The government in 1997 decided against the BOT approach. Then a rivalry about who should control the project emerged between ORC and Oman Oil Co. (OOC), a state-owned firm with ambitions to become a big player within Oman and abroad (see its profile in DT No. 7). Finally, ORC won control over the project and in late 1998 changed its site to Sohar as this offered potential for integration with other industrial projects in that zone.

Now ORC intends to have the refinery on stream by 2006 with a capacity of 75,000 b/d. As a unit of ORC, this will process into high-octane unleaded gasoline the residual fuel surplus from Mina Al Fahal, as well as heavy crude oils into high quality, low-sulphur gasoil/diesel, jet fuel and LPG. UOP has done the basic engineering design for a residue fluid catalytic cracker. The plant will include 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. A 340,000 t/y polypropylene plant will be built at the refinery complex as a JV with an international company.

The FEED work for the refinery was done by JGC Corp. The project management consultant is ABB Lummus Global. Five international groups are prequalified to bid for the EPC contract. UOP is to provide the technology with Neste appointed a technology supplier for the ethrification unit. BP has the products' offtake contract. BankAmerica is the financial consultant for the project, under a contract awarded in Nov. 1999, advising ORC on how best it would be funded and on the possible sources.

A 250,000 t/y calcined coke plant, with the product to be 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 the government 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 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 - which is a world leader in the coke business. The Sohar smelter would only require about 200,000 t/y of coke. But Al Baraka has argued that Qatar and Kuwait were 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 will depend on government guarantees that the planned smelter would buy its coke. The plant would cost about $110m.
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Publication:APS Review Downstream Trends
Date:Feb 4, 2002
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