$1.6bn investment agreement signed for Marsa project in Sohar

Business Monday 22/April/2024 16:02 PM
$1.6bn investment agreement signed for Marsa project in Sohar

Muscat: OQ, the global integrated energy group, has announced the final investment decision with TotalEnergies for the construction of the Marsa LNG Bunkering project at Sohar Port, at a total cost of $1.6 billion, with TotalEnergies contributing 80% and OQ 20% via their incorporated joint venture Marsa Liquefied Natural Gas.

The project integrates an upstream and downstream business segments. The upstream component entails the production of 150 million cubic feet per day of gas from Block 10 which will be subsequently transported through OQGN's gas network to Sohar Port.

The downstream component involves the construction of an LNG plant with a capacity of 1 million tonnes per year, along with a renewable energy power plant with a capacity of 300 MW of PV solar power to provide the total annual energy needs of the LNG plant.

The Marsa LNG Bunkering project will achieve two remarkable milestones in the region; a plant with emissions of less than 3 kg of carbon dioxide for every oil equivalent barrel, and building the first-of-its-kind LNG bunkering facility in the Middle East. The ceremony also witnessed the signing of the Fiscal Protocol among the Government of the Sultanate of Oman represented by the Ministry of Energy and Minerals, Marsa Liquefied Natural Gas (a joint venture between OQ and Total), TotalEnergies EP Oman Development B.V. and Almuzn Liquified Natural Gas (a fully owned subsidiary of OQ) in the presence of Eng. Salim Nasser Al Aufi, Minister of Energy and Minerals, Mulham Bashir Al Jarf, Chairman of OQ Board of Directors and Patrick Pouyanné, Chairman and CEO of TotalEnergies.

The Marsa LNG project reflects OQ's commitment to strategically contributing to the development of Oman's energy sector for creating long-term sustainable value. This global collaboration is a testament to OQ’s consistent steps and unified goals towards supporting economic growth in the Sultanate of Oman, in addition to diversifying OQ's investments in a new energy area, i.e. LNG bunkering facility for ship fueling.

The signing of this fiscal protocol and the announcement of the final investment decision signal OQ's strategy to chart a sustainable future for the energy sector. The project is also expected to contribute to the enhancement of In-Country Value (ICV).

The Marsa LNG plant will be 100% electrically driven, positioning it as the lowest GHG intensity LNG plant ever built worldwide by setting a standard with such a GHG efficiency. The full electrical design of the plant and the integration of the solar farm will eliminate more than 200 kt/y of CO2e over the lifetime of the project, compared to a fuel gas-based design.

The goal of the Marsa LNG project is to serve as the first LNG bunkering hub in the Middle East, showcasing an available and competitive alternative marine fuel to reduce the shipping industry's carbon footprint. Compared to conventional marine fuel, LNG helps to cut GHG emissions by up to 23%, sulfur emissions by 99%, fine particle emissions by 99% and nitrogen oxide emissions by up to 85%.

Eng. Salim Al Aufi, Minister of the Ministry of Energy and Minerals, commented: “The Marsa LNG project is one of the many initiatives that reflect Oman’s goal of achieving carbon neutrality by 2050. The most outstanding aspect of this project is that it is fully electric and 100% powered by solar energy. I congratulate TotalEnergies and OQ on conceptualizing this amazing project that will go a long way in reducing carbon emissions in general and the shipping industry's carbon footprint. Furthermore, this project marks a significant milestone as the first LNG bunkering project in the Middle East and Africa, utilizing the strategic and growing business of the Sohar Port.”

Mulham Basheer Al Jarf, OQ Chairman, said: “We are pleased to partner with TotalEnergies in the Marsa LNG project which will serve as the region’s first LNG bunkering hub. The project will be fully powered by solar energy from a dedicated 300 MWp PV solar plant developed by OQ Alternative Energy and TotalEnergies. Moreover, the project will contribute to OQ Trading's position as a key player in the LNG markets. OQ Gas Network will also provide the necessary gas transportation services to the project.”

“The project leverages on the strategic location of the Sultanate of Oman, specifically the port of Sohar, complementing it’s world class services provided to its clients.We take this opportunity to thank the Ministry of Energy and Minerals for their unwavering support and visionary guidance to make this project a reality,” OQ Chairman concluded.

On his part, Patrick Pouyanné, Chairman and CEO of TotalEnergies, expressed his pride in the joint project, saying: "We are proud to open a new chapter in our long history in Oman with the launch of the Marsa LNG project, in collaboration with our partner OQ. This innovative project illustrates our pioneering spirit and showcases our integrated multi-energy strategy in action, paving the way for the next generation of LNG plants. Fully electric and 100% powered by solar energy, Marsa LNG will set a new industry standard.”

This project is set to have significant economic dimensions by boosting the revenues of the Sultanate of Oman’s treasury and adding local value through joint local investments. The partnership with TotalEnergies will contribute to providing additional direct financial revenues to Oman, increasing traffic in Omani ports, as well as enhancing local investments, expanding the gas and alternative energy supply network, and creating new job opportunities in Oman