By Eric Watkins
Middle East Correspondent
NICOSIA, May 20-- Japan's JGC Corp. and joint venture partner Yokohama-based Chiyoda Corp. have signed an $875.48 million contract with Oman for the construction of an refinery at Sohar, some 250 km northwest of the Omani capital of Muscat.
Under terms of the contract, JGC will provide state-run Sohar Refining Co. (SRC) with overall design, equipment and material procurement, construction, and commissioning services.
On-site construction is expected to start in the forth quarter, with commercial start-up expected by second quarter 2006. The new refinery will have a 116,400 b/d crude unit and a 75,260 b/d residue fluid catalytic cracking unit (RFCCU).
Development of SRC will be closely linked to the Oman Refinery Co. (ORC), which will own both the refineries' feedstock and products. Long residue, a byproduct of ORC's Mina al Fahal refinery, will account for roughly 35% of the feedstock.
The new refinery will receive Mina al Fahal's entire output of 40,000 b/d of long residue, which will be blended with 76,000 b/d of crude from the nearby Petroleum Development Oman tank farm. The feedstock will be carried to Sohar by a planned 260 km, 24-in. diameter pipeline.
ORC last month selected engineering consultant ILF & Partner to undertake the engineering design and route optimization studies for the pipeline project, expected to cost $80-100 million. As part of its contract, ILF & Partner also will design a pumping station at Mina al Fahal and, if necessary, an additional booster pump along the projected pipeline route.
About 10% of SRC's refined product will serve domestic needs, with ORC exporting the remainder through a 10-year off-take agreement it has with BP PLC. Propylene from SRC will be used as feedstock for the Oman Polypropylene Project being developed alongside the refinery at a cost of around $200 million.
Oman's tender board selected the JGC-Chiyoda consortium earlier this year for the contract to construct the Sohar Refinery (OGJ Online, Jan. 7, 2003). JGC also undertook the front-end engineering design for the project, while ABB Lummus is the project management consultant.
Oman holds an 80% stake in SRC, while the remaining 20% is held by the state-run Oman Oil Co.