Oman's Duqm Refinery closes record $4.6bn deal

The agreement marks the largest project financing deal in the history of Oman

Duqm Refinery will account for 8% of Oman's GDP during construction.
Duqm Refinery will account for 8% of Oman's GDP during construction.

Duqm Refinery has secured the largest project finance agreement in Oman's history after clinching a $4.6bn (OMR1.7bn) funding deal for the under-construction megaproject.

Sharia'h-compliant investors from 13 countries and 29 institutions have pledged billions of dollars under a multi-source finance agreement for the 230,000 barrel per day refinery, which will produce crude oil, diesel, jet fuel, naphtha, and liquefied petroleum gas upon completion.

The agreement has been hailed as an “important milestone” for the project, which is a joint venture between state-owned enterprises Kuwait Petroleum International and Oman Oil Company.

READ: Oman's $7bn Duqm Refinery to create 800 jobs

Chief financial officer of Duqm Refinery, Mubarak Al Naamany, said the “largest project financing in the Sultanate of Oman” included the biggest “Sharia'h-compliant facility to a greenfield project in Oman provided by a consortium of Islamic financing institutions”. 

The agreement includes the provision of insurance and guarantees provided by three export credit agencies, something that Naamany said demonstrated global confidence in the project.

Located in the Special Economic Zone in Duqm (Sezad) near Oman's south-east coast, the refinery will process multiple types of blended crude oil and will be configured to operate as a hydrocracking unit. It will also be the first refinery in the Middle East to process crude oil from another GCC country on a long-term contractual basis, project officials said in a statement.

READ: Samsung-Petrofac JV awards $51m Duqm EPC contract to Oman's Galfar

Three engineering, procurement, and construction (EPC) contractors were given the green light to commence respective building activities for the project in July 2018. 

EPC Package 1 covers the construction of process units and will be built by a joint venture (JV) of Técnicas Reunidas and Daewoo Engineering & Construction. Utilities and offsite work, covered under EPC Package 2, is managed by a JV between Petrofac and Samsung Engineering. A JV of Saipem and CB&I is carrying out EPC Package 3 works, which cover all offsite facilities, such as the export terminal.

Site preparation work was completed by Galfar Engineering and Contracting Company, which won the contract in the second quarter of 2015. 

As part of a concerted effort to generate in-country value and support the local labour market, Duqm Refinery will create up to 800 jobs in the next four years. The project will also account for up to 8% of the country's gross domestic product during construction.

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