MUSCAT — Salalah Methanol Company (SMC) began receiving natural gas supplies at its giant complex within the Salalah Free Zone late last week, marking a key phase in the development of the world-scale project. With the arrival of natural gas — the basic feedstock that will be processed into methanol — the state-of-the-art facility enters the commissioning phase ahead of commercial production scheduled early next year, an official said.
“We have now initiated the commissioning phase, with full production slated to commence only in April 2010. Construction of the plant itself is now over 90 per cent complete, with both the completion and commissioning activities being pursued side by side,” the official told the Observer. Owned jointly by the state-owned Oman Oil Company SAOC (90 per cent) and Oman Energy Trading Company (10 per cent), the Salalah methanol project is by far the largest industrial investment in Dhofar Governorate. At full capacity, the plant will produce around 3,000 metric tonnes of methanol per day, placing it in the ranks of international-sized methanol schemes.
South Korea’s G S Engineering and Contracting is close to completing work on the massive complex under an Engineering-Procurement-Construction (EPC) contract valued at around $720 million. Natural gas for the project is being supplied by the Ministry of Oil and Gas through an existing pipeline owned and operated by Oman Gas Company. The pipeline channels the gas feedstock all the way from Saih Rawl in central Oman to Salalah. Under a Gas Sales Agreement (GSA) concluded with Salalah Methanol, around 4 million standard cubic metres of gas per day (mmsm/day) is earmarked for the project.
Contractors are also close to completing work on methanol loading arms that will pump the product into methanol carriers calling at the nearby Port of Salalah. Salalah Methanol’s entire output of around 1 million tonnes of methanol per day is initially earmarked for export. The offtaker is Oman Trading International (OTI), a joint venture between Oman Oil Company and Geneva-headquartered Vitol, a reputable worldwide group engaged in the trade and distribution of hydrocarbons, petrochemicals and other commodities. Under its offtake agreement with Salalah Methanol, OTI will market all the available exportable quantity of methanol. OTI has also concluded time charter agreements with the state-owned Oman Shipping Company (OSC) covering the supply of three dedicated tankers for the methanol export business.
When operational, Salalah Methanol is expected to attract investment in secondary petrochemical ventures that will use methanol as feedstock for downstream processing. As an intermediary chemical feedstock, methanol is used in the manufacture of a wide range of chemicals and end-products. It finds primary use in the manufacture of MTBE, a chemical added to gasoline to reduce vehicle exhaust. It is also used in the production of acetic acid, formaldehyde, and a range of other chemicals and intermediary products that can be further processed into added value commodities.
Significantly, SMC’s launch early next year will also reinforce Oman’s credentials as an methanol producer. The country’s first methanol project, run by Oman Methanol Company LLC at the Port of Sohar, commenced operations in October 2007. Both ventures will take the Sultanate’s combined methanol production capacity to an impressive two million tonnes per year.
By Conrad Prabhu
© Oman Daily Observer 2009
