Sohar refinery construction moves ahead in Oman; subcontracts let

By Eric Watkins
Middle East Correspondent

NICOSIA, Nov. 19 -- JGC Corp. of Japan has awarded subcontracts to three international companies for construction works at Oman's Sohar refinery 250 km northwest of Muscat.

Chicago Bridge & Iron Co. (CB&I) of the US received a $50 million contract for engineering, material supply, fabrication, construction, testing, painting, and insulation of 55 miscellaneous storage tanks, 16 spheres, and one elevated water storage tank.

Athens-based Consolidated Contractors International Co. won a $140 million contract to construct and install civil, mechanical, and electrical units, and India's Dodsal & Co. received a $30 million contract for civil works outside the refinery.

Under terms of the contracts, all work is to be completed by early 2006. Refinery start-up is slated for May 1, 2006.

In May 2003, Oman awarded JGC a contract worth $879 million to construct the refinery (OGJ Online, May 20, 2003). JGC will perform the design, procure materials, and manufacture and test facilities for making gasoline, diesel, and liquefied petroleum gas.

The planned refinery will have a crude unit with a capacity of 116,400 b/d and a production capacity of 51,000 b/d of gasoline and 30,000 b/d each of diesel and fuel gas. Sohar also will have a residue fluid catalytic cracking unit with a capacity of 75,260 b/d.

On a visit to the site at the start of construction last month, Oman's Minister of Oil and Gas Mohammed bin Hamad Al Romhi said the Sohar refinery would provide refined oil products for export as well as for domestic requirements. He said BP PLC has agreed to purchase 90% of the refinery's output for 10 years.

The Sohar refinery project also will provide raw material for the planned $200 million Oman polypropylene plant (OPP). The OPP project is a joint venture of state-run Oman Oil Co. (OOC) 60%, South Korea's LG Engineering 20%, and ABB Lummus of Holland 20%.

"We expect financial close before the end of the year and are targeting a debt, equity ratio of 90:10 which shows investor confidence in the Omani economy, in particular, and the region in general," OOC Deputy CEO Ahmed al-Wahaibi told French news agency AFP in October.

"Total project costs, including financing costs during the construction phase, come to $1.205 billion," Ahmed said.

"LG will off-take the polypropylene and we envisage that they will market this mainly in the Far East where there is a growing demand, especially in China," he said, noting that LG has a strong presence in the Chinese petrochemical market.

Related pipeline
Meanwhile, five international companies submitted bids in October for a project management contract to supervise construction of a 220 km crude oil pipeline to the Sohar refinery from the existing refinery in Muscat. The pipeline will have a capacity of 100,000 b/d of a mixture of crude oil and long residue.

Companies bidding on the pipeline include Mott MacDonald of the UK, ILF Consulting Engineers of Munich, Tebodin BV of The Netherlands, and Canadian companies Veco Engineering and Electrowatt Engineering. The bids reportedly range from 660,000 rials submitted by Mott MacDonald to 1.4 million rials from Veco Engineering.

The Sohar refinery is owned jointly by the Sultanate of Oman and state-run OOC

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