Duqm Refinery achieves closure of Oman’s largest project financing
Wednesday 05/December/2018 19:02 PM
By: Times News Service
Muscat: Duqm Refinery announced the financial closure of its $4.61 billion multi-sourced, Sharia-complaint project at a dinner held at the Intercontinental Hotel in Muscat.
Speaking on the occasion, the President of Kuwait Petroleum International and Chairman of Duqm Refinery, Nabil Bourisli, said, “This achievement reflects the strength and stability of the Omani and Kuwaiti economies. It also reflects the trust and confidence placed by local, regional and international financial institutions in our economic ties that are deeply rooted in history. Our vision is aimed at maximising the value of our natural resources and driving the two countries towards expanding their economic potential that leads to balanced economic growth.”
“This is indeed a very important milestone for the project. It reflects the trust that financial institutions have placed in the project; it will no doubt be one of the key economic drivers for Sezad,” Eng. Hilal Al Kharusi, Vice Chairman of the Board of Directors of Duqm Refinery, said.
“Setting up the Duqm Refinery and Petrochemical Industries Company was an important milestone for petrochemical industries and the key to establishing new downstream industries and creating job opportunities,” he added.
“Kuwaiti banks were effectively involved in financing the project, achieving 32 per cent of the total loan amount. This was driven by the importance of the project, as well as the strategic partnership between the two countries," Eng. Khalid Al Mushaileh, vice president of Kuwait Petroleum International, said.
“This project is in line with the Kuwait Petroleum Corporation 2040 strategy, and it is at the same time, a great opportunity to involve skilled Kuwaiti workforce to be a part of these external investments,” he added.
“The $4.6 billion multi-sourced financing agreement signed for the project made it not only the largest project financing in the Sultanate, it also included the largest Sharia-compliant facility awarded to a Greenfield project in the country provided by a consortium of Islamic financing institutions,” said Mubarak Al Naamany, Chief Financial Officer of Duqm Refinery.
“Facilities were provided by 29 reputed financial institutions from 13 countries and guarantees from three major ECAs,” he added.
“Achieving a debt-to-equity ratio of 55 per cent, with uncovered facilities of 70 per cent of total debt is a testament to the confidence placed by international, regional, and local lenders in the Sultanate, the shareholders, and the project,” Al Naamany said.
The $4.6 billion senior debt facilities comprise seven agreements that include a $1.43 billion International Commercial Facility, a $490 million Onshore Commercial Facility, a $890 million Islamic Facility, a $700 million UKEF Covered Facility, a $500 million CESCE Covered Facility, a $600 million K-EXIM Covered and K-EXIM Direct Facilities.
Regional banks played a big role in this deal, with funding from Kuwaiti and Omani banks representing 43 per cent of the total debt.
The refinery project comprises the development, construction, ownership and operation of the refinery, on-site utilities, infrastructure and storage, together with offsite facilities, including crude tank storage facilities in Ras Markaz, a crude oil pipeline to the refinery and a product export terminal at the Port of Duqm.
The refinery is designed to be able to process a range of blended crude oils and configured as a full-conversion hydrocracker coking facility, which will utilise advanced technology supplied by leading technology licensors. 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 EPC contractors in June 2018.