02 February 2017
By Gulam Ali Khan

Oman Oil Co, the state energy investment arm, is finalising shareholder agreements with Kuwait Petroleum International (KPI) for the Duqm Refinery project. Financial closure for the project is expected to be achieved in the middle of this year.

In November last year, Oman Oil and KPI, a subsidiary of Kuwait Petroleum Corporation, signed a memorandum of understanding (MoU) to cooperate in the development of the Duqm Refinery and Petrochemicals Complex in the Special Economic Zone at Duqm.

Duqm Refinery and Petrochemical Industries Co was set up in 2012 as a joint venture between Oman Oil and Abu Dhabi's International Petroleum Investment Co (IPIC). However, IPIC last year concluded that the proposed new direction of the project, which includes petrochemicals, does not fit its investment strategy and decided to pave the way for new partners to enter the project, Oman Oil had said in November last year.

Oman Oil had noted then that the partnership with IPIC resulted in the completion of substantial work, driven through the project steering committee and its board of directors.

“We are finalising the shareholder agreements with KPI and envision financial closure sometime in the middle of this year. We are hoping to start construction activities before year-end or early next year,” Isam al Zadjali, CEO of Oman Oil, said on Tuesday.

Speaking to mediapersons on the sidelines of an event at the Ministry of Oil & Gas, Zadjali said the Duqm Refinery project, which is expected to be a 50:50 joint venture between Oman Oil and KPI, is progressing as per the original plans.

On whether KPI replacing IPIC as partner will affect the project timeline, he said, “We have no plans, whatsoever, to delay the project. The Kuwaiti partner has already agreed on this.”

Zadjali added that the financing structure of the project will be 60:40 in terms of equity and project financing, involving mainly international banks and credit agencies.

Once completed, Duqm Refinery will have the capacity to process 230,000 barrels of crude oil per day and will serve both local and international markets. The project will be one of the growth engines for the Duqm special economic zone. It will provide development opportunities for new projects that will directly and indirectly interface with the refinery.

© Muscat Daily 2017