15 May 2013
MUSCAT -- Annual revenues generated by Oman Oil Refineries and Petroleum Industries Company (Orpic), the country's flagship refiner and downstream petrochemicals producer, now top $11 billion, effectively making it the biggest company by revenue in the Sultanate.
According to the state-owned group's Chief Executive Officer (CEO) Musab al Mahrouqi, the strong financial position of the company, resulting in the delivery of profits for the second year in a row, is the manifest outcome of the groundbreaking integration of the country's two refineries at Mina al Fahal and Sohar, as well as the associated polypropylene and aromatics plants in the Port of Sohar.
In a recent presentation to professionals representing various sectors, Al Mahrouqi said the integration process helped transform the individual units, which had suffered a collective cash loss of around $50 million in 2010, into a profitable amalgamated entity that has returned healthy profits over the ensuing years.
"We wanted to build an iconic company for Oman because of the big responsibility on us as the country's sole producer of fuels, as well as the flagship of the downstream industry," Al Mahrouqi said. "Orpic's revenue is around $11 billion, making us perhaps the biggest company in Oman, when it comes to revenue.
Our goal was to set up a commercially driven company. We buy crude from the government at market prices and sell our products back to the government at market prices. Thus, our performance is measured according to market parameters -- there are no subsidies for us," he stated.
The CEO credited Orpic's phenomenal turnaround to, among other things, the concept of 'Quick Wins' -- ideas garnered from employees to improve the business and bottom-line of the company without any capital investment. "We had $356 million worth of ideas for implementation over three years through to 2012-end.
We drew a timeline for their implementation. The 'Quick Win' ideas were contributed by more than 250 employees, who are now part of Orpic's Hall of Fame. After all the 'quick wins' were implemented, our financials went from a cash loss of $50 million in 2010 to a profit of $406 million in 2011."
In part, Orpic's healthy performance and robust financials were the result of a strong uptrend in the utilisation rates of the company's assets, he said. "For the first time in 2011, we operated Sohar refinery at 93 per cent average across the whole year, when historically we could operate at a maximum of 68 per cent.
Hence it's been a major contributor to the results the company."
Furthermore, as a result of integration, the restructured and empowered management of Orpic was able to use the refinery's inbuilt flexibility to maximise the output of product streams that fetched the best returns.
"Sohar refinery has some flexibility that allows us to maximise the production of gasoline, propylene for the polypropylene unit, or naphtha for the aromatics unit. Before integration, the economic decision was made solely at the refinery, but now it is driven by what will fetch the highest revenue for us. Thus, sometimes we produce less propylene if the price of gasoline is high, and maximise the production of gasoline. Likewise, when we feel aromatics prices are not doing well, we send naphtha to the gasoline pool. Operating this way has enabled us to generate an income of $400 million. Prior to integration, the separate units were trying to protect their interests, resulting in a lose-lose situation. Our focus now is on maximising value for the entire group," Al Mahrouqi stated.
The ultimate goal of integration, he said, was to create a flagship entity that the country could be proud of.
"We wanted to build pride in our stakeholders, management and staff in how Orpic adds value to the country. In the past, our performance was measured based on the KPI of uninterrupted supply of fuel to the country. We had the choice of either operating a strategic company or to make it a commercial company. But we demonstrated we could do both, with profitability as a measure of our efficiency."
Talking about Orpic's growth objectives, he said the company currently has three major projects in various stages of implementation. Key among these is a plan a major upgrade of the Sohar refinery that will boost capacity by around 70 per cent.
In addition to plans for a Steam Cracker and Polyethylene plant at Sohar, the company is also constructing a product pipeline linking the Sohar and Mina al Fahal refineries, alongside the establishment of a major fuel storage terminal and loading point at Al Jifnain on the Muscat-Nizwa highway. Investments in the new ventures are estimated at $5 billion.
MUSCAT -- Annual revenues generated by Oman Oil Refineries and Petroleum Industries Company (Orpic), the country's flagship refiner and downstream petrochemicals producer, now top $11 billion, effectively making it the biggest company by revenue in the Sultanate.
According to the state-owned group's Chief Executive Officer (CEO) Musab al Mahrouqi, the strong financial position of the company, resulting in the delivery of profits for the second year in a row, is the manifest outcome of the groundbreaking integration of the country's two refineries at Mina al Fahal and Sohar, as well as the associated polypropylene and aromatics plants in the Port of Sohar.
In a recent presentation to professionals representing various sectors, Al Mahrouqi said the integration process helped transform the individual units, which had suffered a collective cash loss of around $50 million in 2010, into a profitable amalgamated entity that has returned healthy profits over the ensuing years.
"We wanted to build an iconic company for Oman because of the big responsibility on us as the country's sole producer of fuels, as well as the flagship of the downstream industry," Al Mahrouqi said. "Orpic's revenue is around $11 billion, making us perhaps the biggest company in Oman, when it comes to revenue.
Our goal was to set up a commercially driven company. We buy crude from the government at market prices and sell our products back to the government at market prices. Thus, our performance is measured according to market parameters -- there are no subsidies for us," he stated.
The CEO credited Orpic's phenomenal turnaround to, among other things, the concept of 'Quick Wins' -- ideas garnered from employees to improve the business and bottom-line of the company without any capital investment. "We had $356 million worth of ideas for implementation over three years through to 2012-end.
We drew a timeline for their implementation. The 'Quick Win' ideas were contributed by more than 250 employees, who are now part of Orpic's Hall of Fame. After all the 'quick wins' were implemented, our financials went from a cash loss of $50 million in 2010 to a profit of $406 million in 2011."
In part, Orpic's healthy performance and robust financials were the result of a strong uptrend in the utilisation rates of the company's assets, he said. "For the first time in 2011, we operated Sohar refinery at 93 per cent average across the whole year, when historically we could operate at a maximum of 68 per cent.
Hence it's been a major contributor to the results the company."
Furthermore, as a result of integration, the restructured and empowered management of Orpic was able to use the refinery's inbuilt flexibility to maximise the output of product streams that fetched the best returns.
"Sohar refinery has some flexibility that allows us to maximise the production of gasoline, propylene for the polypropylene unit, or naphtha for the aromatics unit. Before integration, the economic decision was made solely at the refinery, but now it is driven by what will fetch the highest revenue for us. Thus, sometimes we produce less propylene if the price of gasoline is high, and maximise the production of gasoline. Likewise, when we feel aromatics prices are not doing well, we send naphtha to the gasoline pool. Operating this way has enabled us to generate an income of $400 million. Prior to integration, the separate units were trying to protect their interests, resulting in a lose-lose situation. Our focus now is on maximising value for the entire group," Al Mahrouqi stated.
The ultimate goal of integration, he said, was to create a flagship entity that the country could be proud of.
"We wanted to build pride in our stakeholders, management and staff in how Orpic adds value to the country. In the past, our performance was measured based on the KPI of uninterrupted supply of fuel to the country. We had the choice of either operating a strategic company or to make it a commercial company. But we demonstrated we could do both, with profitability as a measure of our efficiency."
Talking about Orpic's growth objectives, he said the company currently has three major projects in various stages of implementation. Key among these is a plan a major upgrade of the Sohar refinery that will boost capacity by around 70 per cent.
In addition to plans for a Steam Cracker and Polyethylene plant at Sohar, the company is also constructing a product pipeline linking the Sohar and Mina al Fahal refineries, alongside the establishment of a major fuel storage terminal and loading point at Al Jifnain on the Muscat-Nizwa highway. Investments in the new ventures are estimated at $5 billion.
© Oman Daily Observer 2013
