Oman Oil Co capex to exceed $1bn in 2017

Conrad Prabhu

Muscat - Oman Oil Company SAOC (OOC), the government’s energy and strategic investment arm, is planning a combined capital investment in excess of $1 billion across its substantial portfolio subsidiaries this year.

Also expected to make headway this year is the development of a string of strategic gas pipelines, and midstream and downstream petrochemical projects..

The investments underscore the wholly government-owned entity’s commitment to catalysing industrial and economic growth notwithstanding the challenging fiscal environment.

Insights into OOC’s investment and development strategy for 2017 were shared by the group’s Chief Executive Officer, Eng Isam Saud al Zadjali in comments to local journalists yesterday.

Capital investments being weighed by the Group across the four verticals into which its diverse subsidiaries have been grouped are “roughly north of one billion dollars,” Al Zadjali said.

Among the first ventures to advance will be the LPG Extraction Project of Salalah LPG SFZCO LLC (SLPG), a wholly owned subsidiary of Oman Oil Facilities Development Company LLC (OOFDC), one of the four verticals of the Group.

UK-based international oil services contractor Petrofac has been awarded a contract to construct the 327,000 tonnes per year capacity plant at the Salalah Free Zone at a cost of around $600 million.

“The Salalah LPG project has been approved by the Board, and we are negotiating with the banks right now on a financial close in the next few weeks,” Al Zadjali said.

Next off the blocks is a 1,000 metric tonnes per day capacity ammonia plant, also planned in the free zone alongside the Group’s wholly owned subsidiary Salalah Methanol Company.

Besides being used as an ingredient in the production of fertilisers, ammonia is also an important intermediate chemical in the manufacture of synthetic resins (urea based), synthetic fibres (acrylics and nylons, and polyurethanes, among other applications.

“We are going to make a recommendation to our Board on the implementation of the ammonia project, which is an expansion of Salalah Methanol,” the CEO said.

Importantly, several gas infrastructure projects are expected to progress during the course of 2017, according to the official. Most notable is the much-anticipated gas pipeline supplying natural gas from Saih Nihayda in central Oman to Duqm Special Economic Zone. Also in the works, said Al Zadjali, is a ‘Northern Pipeline’ linking Sohar with Wadi Jizzi.

A world-scale crude oil storage park planned at Ras Markaz, just south of the Duqm SEZ, is also planned to make headway this year, according to the CEO.

The facility will also double as a second crude export terminal for the Sultanate, after Mina Al Fahal in Muscat, which has long served as the nation’s principal export terminal.

Additionally, Oman Oil’s upstream energy investment arm, Oman Oil Company Exploration and Production (OOCEP), is moving aggressively to expand its portfolio of assets in the hydrocarbons sector. Having signed an Exploration and Production Sharing Agreement (EPSA) with the government for Block 48 onshore Oman, the company has also submitted a bid jointly with Occidental for Block 30, a gas block currently up for grabs as part of the 2016 Oman Licensing Round.

Explaining the company’s underlying vision for the upstream sector, Al Zadjali said: “Our strategy is two-fold: one is to become a competent operator, and at the same time, join forces with international oil companies to work together in various blocks we have in Oman. We have already partnered with (energy majors) BP (in Block 61) and Oxy (Blocks 62 and 9). This trend will continue, but we wish to operate in Oman alongside International Oil Companies (IOCs).”

OOCEP’s assets in the Sultanate also include: Block 60 (Abu Tubul), and Block 42 (100 per cent owned).

© Oman Daily Observer 2017