Wednesday 17 / April / 2024
Muscat: A multi-source project financing of US$4.61 billion was signed for the 230,000 barrels per day (bpd) Duqm Refinery Project.
The Duqm Refinery Project is a joint venture between Kuwait Petroleum International and the Oman Oil Company and is located in the Special Economic Zone in Duqm (Sezad) along the south east coast of the Sultanate.
Commenting on this significant milestone, the Project Chief Financial Officer, Mubarak Al Naamany, said, “The $4.61 billion multi-sourced financing signed for the project is not only the largest project financing in the Sultanate, but also includes the largest Sharia-compliant facility to a green field project in Oman provided by a consortium of Islamic financing institutions.”
“These facilities provided by 29 reputed financial institutions from 13 countries and insurance and guarantees (cover) provided by three major Export Credit Agencies are a testament to the confidence placed by international, regional, and local lenders in the Sultanate, the shareholders, and the project,” he added.
The facilities comprise an international commercial facility, an onshore commercial facility, an Islamic facility, a United Kingdom (UKEF) covered facility, a Spain (CESCE) covered facility, a South Korea (K-EXIM) covered facility, and a K-EXIM direct facility.
The project comprises the development, construction and operation of the refinery, on-site utilities, infrastructure and storage, together with offsite facilities including crude tank storage facilities in Ras Markaz, an 80-km crude oil pipeline to the refinery and a product export terminal at the Port of Duqm.
Following the success of the Sohar, Sur and Salalah free zones, Sezad is viewed as Oman’s next industrial hub and the Duqm Refinery Project will be the cornerstone of this undertaking.
The project is the first major industrial development in Sezad and will be the springboard for making Sezad one of the largest developments of its kind in the Middle East.
The Duqm Refinery Project is of strategic importance and is a priority national investment for the Government of Oman, fully aligned with the objective of diversifying the Omani economy and promoting long-term economic growth and employment opportunities for Omani nationals.
The project is also the first in other aspects. It is the first major cross border refinery project in the Middle East region. It is also the first joint venture of a refinery project in the region between government owned oil companies of two Middle East countries. In addition, it is the first refinery in the Middle East to process crude from another Middle Eastern country on a long-term contractual basis.
The refinery is designed to be able to process a range of blended crude oils and is configured as a full-conversion hydrocracker/coking facility, which will utilise advanced technology, commercially proven at the scale of the project, supplied by leading technology licensors.
The engineering, procurement and construction of the project are being undertaken under three lump sum turnkey contracts with world-class contractors. A formal notice to proceed was issued to the contractors in June 2018.
A number of specialist advisers were engaged to support the financing of the project, which include Crédit Agricole Corporate and Investment Bank as Financial Adviser to Duqm Refinery, Allen & Overy as International Legal Counsel to Duqm Refinery and Latham & Watkins as International Legal Counsel to Lenders.
