26 September 2015
Al Maha Research Team - Despite the plunge in oil prices over the last one year which is expected to weigh significantly on the budgets of the oil-producing Gulf countries, the governments are committed to go ahead with major infrastructure projects that are aimed at enhancing economic revenue. Among Oman's biggest projects under way is the Liwa Plastics Project that is being developed by national refining and Petrochemicals Company, Oman Oil Refineries and Petroleum Industries Company (Orpic). Orpic is investing an estimated $8 billion in its three strategic growth projects; Sohar Refinery Improvement Project (SRIP), Muscat-Sohar Product Pipeline and Liwa Plastics Industries Complex (LPIC) that will widen its product mix, intensify downstream business operations and enhance its contribution to the economy.
The projects are progressing on track and are expected to be operational in 2018 by when the company sees its contribution to the economy increase to around 8-9 per cent of gross domestic product (GDP) from that of 6 per cent as of 2014. Taking advantage of the growing global market for plastics, Liwa Plastics Industries Complex will add $2.3 billion to the country's GDP, while its foreign trade surplus will be to the tune of $1.5 billion, according to the Chief Financial Officer of Orpic in addition to generating over 1600 direct and indirect jobs. The $5.2 billion Liwa Plastics Industries Complex is the largest of the three above mentioned projects, which will be Oman's first steam-cracker plant producing a range of products and supporting the development of a downstream plastics industry in the Sultanate.
The project will be funded by way of $4 billion term loan from international financial institutions and the $1.2 billion will be brought in by the company. Orpic is targeting to sign financing agreements concurring with the awarding of Engineering, Procurement and Construction (EPC) contracts in the fourth quarter of this year, according to the Company's chief official.
The project's physical hub will be in the Sohar Industrial Port Area at Orpic's existing facility and will be integrated with the Sohar refinery, aromatics plant and polypropylene plant owned by Orpic.
The Liwa Plastics Project involves the construction of a natural gas liquids (NGL) extraction plant in Fahud, a 300 km pipeline between Fahud and Sohar Industrial Port Area for gas transportation, a 900,000 tonnes per annum (tpa) steam cracker unit, a high-density polyethylene (HDPE) plant, a linear low-density polyethylene (LLDPE) plant, a 300,000 tpa polypropylene plant, a pyrolysis gasoline (PyGas) hydrogenation unit, a 46,000 tpa butene-1 plant and a methyl tert-butyl ether (MTBE) unit.
The plant will process light ends produced in the Sohar refinery and the aromatics plant as well as optimise natural gas liquids extracted from currently available natural gas supplies. The project would reroute elements of existing production in combination with additional purchased feedstock to deliver high value polymer products for the local and international marketplaces. It will increase Oman's plastics production by one million tonnes, while increasing Orpic's polyethylene and polypropylene production to 1.4 million tonnes by 2018.
GCC is the world's largest source of polyethylene and polypropylene -- chemicals that are used in the manufacturing of plastics, according to statistics provided by Gulf Petrochemicals & Chemicals Association (GPCA). The combined production of the two in the GCC is set to double to 31 million tonnes this year from that of five years ago. By 2020, GCC's plastic consumption will grow by about 8 per cent, compared to that of 25 per cent in Europe and North America, and by 37 per cent in Asian and Oceanic countries.
Thus the Liwa project along with the two other growth projects would transform Orpic from a refinery operator to a dynamic and flexible petrochemicals producer, doubling its profits. According to industry experts, Oman's petrochemical sector is the third largest in the GCC, behind Saudi Arabia and Qatar.
Out of GCC's 66.1 million tonnes petrochemical exports in 2013, Oman's contribution was 10.5 per cent which has doubled over the past decade. Oman has 7.4 per cent of GCC's petrochemical capacity and with the boost in production capacity; LPIC will further strengthen Orpic's position amongst the Gulf petrochemical producers.
The expansion projects will also maximise the commercial capabilities of the company and further add value for the stakeholders in light of the prospect of an Initial Public Offering (IPO). As a part of government's privatisation programme, Orpic plans to sell its first shares to the public through one of Oman's biggest IPOs in the coming future that will attract local and international investors.
Disclaimer: The views and opinions expressed in this article are solely those of the authors and do not reflect the opinion of the Observer.
Al Maha Research Team - Despite the plunge in oil prices over the last one year which is expected to weigh significantly on the budgets of the oil-producing Gulf countries, the governments are committed to go ahead with major infrastructure projects that are aimed at enhancing economic revenue. Among Oman's biggest projects under way is the Liwa Plastics Project that is being developed by national refining and Petrochemicals Company, Oman Oil Refineries and Petroleum Industries Company (Orpic). Orpic is investing an estimated $8 billion in its three strategic growth projects; Sohar Refinery Improvement Project (SRIP), Muscat-Sohar Product Pipeline and Liwa Plastics Industries Complex (LPIC) that will widen its product mix, intensify downstream business operations and enhance its contribution to the economy.
The projects are progressing on track and are expected to be operational in 2018 by when the company sees its contribution to the economy increase to around 8-9 per cent of gross domestic product (GDP) from that of 6 per cent as of 2014. Taking advantage of the growing global market for plastics, Liwa Plastics Industries Complex will add $2.3 billion to the country's GDP, while its foreign trade surplus will be to the tune of $1.5 billion, according to the Chief Financial Officer of Orpic in addition to generating over 1600 direct and indirect jobs. The $5.2 billion Liwa Plastics Industries Complex is the largest of the three above mentioned projects, which will be Oman's first steam-cracker plant producing a range of products and supporting the development of a downstream plastics industry in the Sultanate.
The project will be funded by way of $4 billion term loan from international financial institutions and the $1.2 billion will be brought in by the company. Orpic is targeting to sign financing agreements concurring with the awarding of Engineering, Procurement and Construction (EPC) contracts in the fourth quarter of this year, according to the Company's chief official.
The project's physical hub will be in the Sohar Industrial Port Area at Orpic's existing facility and will be integrated with the Sohar refinery, aromatics plant and polypropylene plant owned by Orpic.
The Liwa Plastics Project involves the construction of a natural gas liquids (NGL) extraction plant in Fahud, a 300 km pipeline between Fahud and Sohar Industrial Port Area for gas transportation, a 900,000 tonnes per annum (tpa) steam cracker unit, a high-density polyethylene (HDPE) plant, a linear low-density polyethylene (LLDPE) plant, a 300,000 tpa polypropylene plant, a pyrolysis gasoline (PyGas) hydrogenation unit, a 46,000 tpa butene-1 plant and a methyl tert-butyl ether (MTBE) unit.
The plant will process light ends produced in the Sohar refinery and the aromatics plant as well as optimise natural gas liquids extracted from currently available natural gas supplies. The project would reroute elements of existing production in combination with additional purchased feedstock to deliver high value polymer products for the local and international marketplaces. It will increase Oman's plastics production by one million tonnes, while increasing Orpic's polyethylene and polypropylene production to 1.4 million tonnes by 2018.
GCC is the world's largest source of polyethylene and polypropylene -- chemicals that are used in the manufacturing of plastics, according to statistics provided by Gulf Petrochemicals & Chemicals Association (GPCA). The combined production of the two in the GCC is set to double to 31 million tonnes this year from that of five years ago. By 2020, GCC's plastic consumption will grow by about 8 per cent, compared to that of 25 per cent in Europe and North America, and by 37 per cent in Asian and Oceanic countries.
Thus the Liwa project along with the two other growth projects would transform Orpic from a refinery operator to a dynamic and flexible petrochemicals producer, doubling its profits. According to industry experts, Oman's petrochemical sector is the third largest in the GCC, behind Saudi Arabia and Qatar.
Out of GCC's 66.1 million tonnes petrochemical exports in 2013, Oman's contribution was 10.5 per cent which has doubled over the past decade. Oman has 7.4 per cent of GCC's petrochemical capacity and with the boost in production capacity; LPIC will further strengthen Orpic's position amongst the Gulf petrochemical producers.
The expansion projects will also maximise the commercial capabilities of the company and further add value for the stakeholders in light of the prospect of an Initial Public Offering (IPO). As a part of government's privatisation programme, Orpic plans to sell its first shares to the public through one of Oman's biggest IPOs in the coming future that will attract local and international investors.
Disclaimer: The views and opinions expressed in this article are solely those of the authors and do not reflect the opinion of the Observer.
© Oman Daily Observer 2015
