Orpic, one of Oman’s largest companies, is on track to add output and value through its latest plastics complex in Sohar’s industrial port area
New production facilities being set up by Oman Oil Refineries and Petroleum Industries Company (Orpic) will help spur the domestic plastics industry enabling a significant step up in exports and creation of new ventures downstream which will in turn aim to pene-trate foreign markets.
The Liwa Plastics Industries Complex (LPIC) coming up in Sohar’s industrial port area is Oman’s biggest integrated production scheme with potential to double Orpic’s profit and make it a significant player in the international petrochemicals marketplace, Or-pic says
LPIC, essentially a steam cracker project, will process light ends produced in Orpic’s Sohar refinery and its aromatics plant nearby. It will also optimise natural gas liquids (NGLs) extracted from available natural gas supplies. The integration aspect involves using elements of existing production with additional purchased feedstocks to deliver high volume polymer products for local and export markets.
The objective is to increase value from Omani crude oil and natural gas.
Associated with LPIC is a natural gas extraction plant in Fahud, a 300 km pipeline between there and Sohar for gas transportation, an 800,000 tonnes per year steam cracker unit, a high density polyethylene (HDPE) plant, a linear low density polyethylene (LLDPE) plant and a polypropylene production unit. The significance of LPIC is that Oman will be able for the first time to produce polyeth-ylene, creating opportunities for the export of the plastic and the making of plastic products from future downstream industries.
LPIC is scheduled to become operational in 2018. 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.
The complex will produce a total of 838,000 tonnes annually of polyethylene (LLDPE and HDPE), 215,000 tonnes of polypropylene, 186,000 tonnes of mogas and 46,000 tonnes of benzene.
Orpic was formed from the integration of three companies – Oman Refineries and Petrochemicals Company LLC (ORPC), Aromat-ics Oman LLC (AOL) and Oman Polypropylene (OPP). Orpic’s refineries at Sohar and Muscat, as well as its aromatics and polypro-pylene production plants in the Sohar complex, provide fuels, chemicals and feedstock to Oman and to international markets.
Orpic’s existing polypropylene plant has capacity to produce around 350,000 tonnes per year. LPIC will increase Orpic’s annual plastics production capacity to 1.4 million tonnes of polyethylene and polypropylene with revenues expanding significantly.
In 2012, Orpic’s polypropylene plant crossed a major milestone when it achieved 1 million tonnes as output from the time it began production several years earlier. The plant exports to India, Sri Lanka, the UAE, other Middle East states, Pakistan and Bangladesh.
Orpic’s aromatics plant, which will supply light ends for processing at the new plastics complex, makes paraxylene and benzene, which are important raw materials for a wide range of petrochemical intermediaries, and are used to produce a variety of consumer goods. Their annual output is around 90,000 tonnes and both products are exported through Sohar port to destinations in Asia.
The aromatics plant also makes other by-products, such as Light Straight Run Naphtha, liquid petroleum gas, raffinate and heavy aromatics.
Last year Orpic signed technology contracts for different units of the LPIC including NGL extraction, Pygas hydrogenation, methyl tert-butyl ether (MTBE), polypropylene and polyethylene units.
Randall Gas Technologies will provide NGL extraction technology, which will be installed at the extraction plant in Fahud. Certain components will be separated from natural gas for use in the production of plastics. Axens will provide the Pygas hydrogenation unit which will produce isoprene, benzene, toluene and xylenes. CB&I’s technology will be used in the MTBE production unit and for ethylene production, Basell Poliolefine will supply technological components for the polypropylene plant and Univation Technolo-gies will provide technology for polyethylene manufacturing.
BIDDING FOR DEALS
Orpic aims to raise $4 billion for the new plastics complex. Bidding is underway for four engineering, procurement and construc-tion (EPC) bid packages of the project. Orpic received by early October a positive response with five technical bids submitted for the polymers plant and three for the NGL extraction package. A number of bids are also expected on the steam cracker and pipeline packages.
“It’s positive to see so many strong technical bids submitted from several notable proponents and JV partners. This project will be one of the largest in the region, and we expect to be making a significant impact on the local economy through EPC works alone,” Musab al Mahrouqi, CEO of Orpic, was quoted as saying.
Orpic is on track to conclude evaluation of bids for all the packages in early October, with final decisions by the end of the month.
“We are currently in discussion with eight export credit agencies regarding project due diligence, and the terms and conditions of financing this project, and we plan to launch requests for proposals to commercial banks over the coming month,” Al Mahrouqi said last month.
The project has already obtained environmental permits from the Ministry of Environment and Climate Affairs, and has been granted gas allocation, and is finalising the gas supply agreements, with the Ministry of Oil and Gas.
Land agreements with Sohar Port and Sohar Free Zone and the land agreement for Fahud have been finalised and awaiting signing.
All technical and commercial terms and conditions for supply of utilities, such as electricity and cooling water, have been finalised with Majees and Majan.