Muscat: A multi-source project financing was achieved for the Duqm Refinery Project. This is a major milestone for the 230,000 bpd refinery.
The Duqm Refinery Project is a joint venture between Kuwait Petroleum International and the Oman Oil Company and is located at the Special Economic Zone in Duqm (SEZAD) along the south east coast of the Sultanate of Oman. The Project comprises the development, construction and operation of the refinery, on-site utilities, infrastructure and storage together with offsite facilities including crude tank storage facilities in Ras Markaz, an 80 km crude oil pipeline to the refinery and a product export terminal at the Port of Duqm.
Following the success of the Sohar, Sur and Salalah free zones; SEZAD is viewed as the Sultanate of Oman’s next industrial hub and the Duqm Refinery Project will be the cornerstone of this undertaking. The Project is the first major industrial development in SEZAD and will be the springboard for making SEZAD one of the largest developments of its kind in the Middle East.
The Duqm Refinery Project is of strategic importance and is a priority national investment for the Government of Oman, fully aligned with the objective of diversifying the Omani economy and promoting long term economic growth and employment opportunities for Omani nationals.
Commenting on this significant milestone, the Project Chief Financial Officer, Mubarak Al Naamany said “The US$ 4.61 Billion multi-sourced financing signed for the Project is not only the largest project financing in the Sultanate of Oman, it also includes the largest shariah-compliant facility to a green field project in Oman provided by a consortium of Islamic financing institutions”. He further stated “these facilities provided by 29 reputed financial institutions from 13 countries and insurance and guarantees (cover) provided by three major Export Credit Agencies, is a testament of the confidence placed by international, regional, and local lenders on the Sultanate of Oman, the shareholders, and the Project”.
The facilities comprise an International Commercial Facility, an Onshore Commercial Facility, an Islamic Facility, a United Kingdom (UKEF) Covered Facility, a Spain (CESCE) Covered Facility, a South Korea (K-EXIM) Covered Facility, and a K-EXIM Direct Facility.
The Project is also the first in other aspects. It is the first major cross border refinery project in the Middle East region. It is also the first joint venture of a refinery project in the region between government owned oil companies of two Middle East countries. In addition, it is the first refinery in the Middle East to process crude from another Middle Eastern country on a long term contractual basis.
The refinery is designed to be able to process a range of blended crude oils and is configured as a full-conversion hydrocracker / coking facility which will utilise advanced technology, commercially proven at the scale of the Project, supplied by leading technology licensors. Engineering, procurement and construction of the Project is being undertaken under three lump sum turn-key contracts with world class contractors. Formal notice to proceed was issued to the contractors in June 2018.
A number of specialist advisers were engaged to support the financing of the Project which include Crédit Agricole Corporate and Investment Bank as Financial Adviser to Duqm Refinery, Allen & Overy LLP as International Legal Counsel to Duqm Refinery and Latham & Watkins LLP as International Legal Counsel to Lenders.