Orpic (Oman Oil Refineries and Petroleum Industries Co)
Petrochem powerhouse in the making
Orpic has announced investments in excess of $5 billion in the development of a world-scale integrated refinery and petrochemicals complex at SOHAR Port world that also promise to maximize value addition to the country’s hydrocarbon resources. 40
Ending a brief hiatus in investments in mega industrial ventures in the country, Orpic – the Sultanate’s refining and petrochemicals flagship – has kicked off an ambitious strategy to ramp up its anchor development in SOHAR Port. Owned by the Government of the Sultanate of Oman and by Oman Oil Company SAOC, the commercial company wholly owned also by the Government of the Sultanate of Oman, Orpic is ploughing more than $5 billion in a trio of major projects with strategically important portents for the economy. Much of this investment will be funneled into projects that will transform the industrial port’s petrochemicals cluster into a teeming, valueadding, revenue-generating petrochemical powerhouse. The most significant of Orpic’s new investments is the Sohar Refinery Improvement Programme (SRIP), a contract for which was signed last November. The joint venture of to Daelim Industrial Company & Petrofac Engineering & Construction was awarded a contract valued at around $2.1 billion for the engineering-procurementconstruction (EPC) package linked to SRIP. SRIP is a response to the need to upgrade refining capability in order to manage the change in the nature of Omani crude oil, and further maximize the value of the refined petroleum products. At the same time, it will significantly improve environmental performance on the back of the progress made by Orpic’s Environmental Improvement Programme (EIP), which was initiated by the company in 2011. SRIP will help in meeting the increasing demand for petroleum products. Capacity is also addressed within SRIP as it will allow an increase in the refinery’s overall production levels.
Fuels, propylene and naphtha production will rise by 70%. This increase will provide the answer to the continuing growth of fuel consumption in the country, which has grown by 10% to 15% annually over the past 5 years. In addition, the increased supply of feedstock flowing from the Sohar Refinery to Orpic’s Polypropylene Plant will enable the latter to reach its full production capacity for the first time. Another first will be the ability to produce bitumen from the Orpic Sohar complex. Bitumen is used primarily to manufacture asphalt and is increasing demand in the Sultanate for infrastructural projects. The increased supply of naphtha that results from SRIP means that that the amount purchased by Orpic will also reduce from 75% to 25% of its total requirement.
Positive impacts Aside from the immediate commercial benefits that SRIP brings to the business, it will have further positive impacts in other areas; 300 direct, permanent jobs will be created by SRIP contractors, as well as provision of hundreds Omani contract roles over the project lifetime. Orpic started to implement intensive training and qualification programs for 100 new graduates annually since 2011 with a total of 230 trainees benefiting from the initiative as of December-end 2013. The programme lasts no more than 18 months, after which trainees join different technical and administrative functions, based on the company’s human resources strategy for the planned development projects. In addition, SRIP will continue to promote valueadded not only to the local but also now to the national economy. In the past two
years, Orpic has committed 10% of its Oman contracts and procurements to the North Al Batinah Governorate. Now with SRIP, Orpic are looking to channel 15% of the project value directly to drive the in-country value factor. That means around US$375 million directly stimulating the national economy. The Sohar Refinery Improvement Project is one of three strategic projects that Orpic will implement through to 2018, the other two being the Liwa Plastics Project (LPP) and the Muscat-Sohar Pipeline Project (MSPP). Liwa Plastics Project is a strategic project that will improve Orpic’s product mix and business model, double its profit and support the development of a downstream plastics industry in Oman. Taking advantage of the growing global market for plastics, it will create new business opportunities and employment in the Oman, and firmly reinforce Orpic as a significant player in the international petrochemicals marketplace. This project will bring new business development opportunities for the Sultanate in the fast growing plastics industry.
Maximising value-add LPP is a steam cracker project which will process light ends produced in Orpic’s Sohar Refinery and its Aromatics plant as well as optimize Natural Gas Liquids (NGLs) extracted from currently available natural gas supplies. Its concept lies in rerouting elements of existing production in combination with additional purchased feedstocks to deliver high value polymer products for the local and international marketplaces. Its primary goal is to further increase the value-added that can be derived from Omani crude oil and natural gas. One
of the first key milestones has already been passed with the Ministry of Oil and Gas’ agreement to the natural gas allocation for the project. The project has six core components to it: A natural gas extraction plant in Fahud; 300km pipeline between Fahud and SOHAR Port for gas transportation; an 800+kTA Steam Cracker Unit; HDPE Plant; LLDPE Plant; and Polypropylene Plant It will enable Oman, for the first time, to produce polyethylene, the form of plastic that rates highest in terms of global demand, thus enabling Orpic to deepen access in its existing international markets as well as develop new ones. The project is on schedule for completion during 2018. Plastics production post-launch is projected to increase by 1 million tonnes, giving Orpic a total of 1.4 million tonnes of polyethylene and polypropylene production by 2018. The company’s revenue will grow further following LPP, and its profits will double. With the highly integrated complex in Sohar including the refinery, aromatics plant, steam cracker and the downstream polypropylene and polyethylene plants, the operation will be one of the best integrated refinery and petrochemical facility combinations in the world, and will be able to achieve the maximum value-added for Oman’s hydrocarbon molecule. In terms of employment, the construction phase of LPP will require up to 7,000 Full Time Equivalents (FTEs). Once the project has been completed, it is anticipated that 350 operators will be required to manage the facilities, as well as 150 technicians. The indirect employment effect is expected to create more than 1,200 jobs in the local area. 41