Oman concludes deals, paving the way for Sohar oil refinery project

The construction of a US $3.12 billion oil refinery facility in Oman has received a major boost with the conclusion of a series of deals.

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By  Eudore Chand Published  December 30, 2003

The construction of a US $3.12 billion oil refinery facility in Oman, due to be commissioned in 2006, has received a major boost with the conclusion of a series of deals covering financial guarantees, supply of feedstock and use of land. The refinery, located in the Sohar industrial estate and fully owned by the government, will consist of a crude unit with a capacity of 116,400 barrels per day (bpd) and a residue fluid catalytic cracking unit (RFCCU) with a 75,260 bpd capacity. The Sohar refinery, one of the biggest industrial ventures being carried out in the country, was the first refinery project to be successfully financed by Middle East banks within the last 10 years. “The development has a special importance to the Government-owned Oman Oil Refinery as it will treat its fuel oil produced at Mina Al-Fahal,” said Dr Mohammed bin Hamad al Rumhi, Oman’s Minister of Oil and Gas. Around 90% of the project’s total cost will be financed through debt, although the Japanese Bank for International Cooperation had offered a direct loan of $261.9 million, while Nippon Exports Insurance Company has provided a joint financing of US$261.9 million. Another 10 international and regional banks had agreed to offer loans worth US$907.8 million.The refinery will export 90% of its products through a ten year deal with international oil giant, BP. “The consortium’s success reflects the confidence of banks in financing projects in the Sultanate and the economic benefits of this project and its solid contracting structure,”explains Rumhi.

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