Sohar Refinery, Wilayat of Sohar, Oman

The Sohar Refinery Company was set up in 2003 to construct, commission and operate a new grass roots refinery in Wilayat of Sohar, Oman (250km northwest of the capital Muscat). The company is 20% owned by the Oman Oil Company and 80% by the government of Oman. Oman has only one refinery in Muscat and it was felt that such an oil-rich country should have a greater degree of independence in the refinery sector, hence this new facility.

The refinery was designed to process a mixed feedstock of Oman crude oil and atmospheric residue from the Oman Refining Company.

The refinery has an atmospheric distillation crude unit with a capacity of 116,000bpd and a Residue Fluidised Catalytic Cracking (RFCC) unit with a capacity of 75,260bpd. The refinery also has an LPG Merox unit, a gasoline desulphurisation unit and a deep desulphurisation unit.

The refinery will operate initially for maximum olefin production to supply 340,000tpy of propylene. It is estimated that around 10% of the refined products will be sold in local markets with the remainder being available for export.

The refinery output for export will include fuel oils, gasoline, LPG, naphtha, gas oil and kerosene. The exports will be through a ten-year off-take agreement with BP.

The refinery will also be used to treat (desulphurisation) fuel oils produced at Mina Al-Fahal, crude oil exporting terminal in Muscat. A 266km pipeline has also been built to transport fuel and crude oil from the Mina Al-Fahal facility to the refinery, which cost an estimated $175m.

FINANCE

The refinery cost $1.3bn. This was 90% financed by debt through a series of loans from a number of financial institutions, including Japanese Bank for International Cooperation (direct loan of $261.9m), Nippon Exports Insurance Company ($261.9m), Bank of Tokyo Mitsubishi and a further ten banks ($907.8m). Bank of America Securities has been appointed as the financial advisor to the project and the Omani Government stake in the project is overseen by the Oman Ministry of Finance.

CONTRACTORS AND CONSTRUCTION

The EPC (Engineering Procurement and Construction) contract for the project was awarded to a Japanese consortium (JGC Corporation and Chiyoda) in July 2003 for a lump sum of $880m). The project documents were signed in December 2003. JGC Corporation had already carried out the FEED contract for the refinery in 2000 and was now responsible for the design and commissioning of the facility.

ABB Lummus were the project managers and LG Caltex the maintenance and operations contractor. SK Engineering of South Korea was also involved in the management and operation of the refinery.

Consolidated Contractors was appointed as the subcontractor for all process and utilities work and provided three cranes for the lifting of heavy sections during construction. The three cranes were a 1,600t PTC containerised platform twin-ring lattice boom, a 1,000t Demag C4800 (both of these were hired from Mammoet) and a 400t Demag CC2400. Other cranes on site provided by Consolidated Contractors include a 200t American 225, a 165t American 9299, a 125t American 9260 and a 100t Grove GMK 5100.

TransTel Engineering was awarded the telecommunications contract for the new refinery in March 2004. This was a turnkey package involving the design, engineering and commissioning of an integrated telecommunications system within the refinery to include video, radio, voice and data systems.

Construction of the refinery was started in the first quarter of 2004 and the project was structurally completed by April 2006.

REFINERY TECHNOLOGY

The technology chosen for the new refinery for etherification included a system from Fortums (NExTAME) and installed by Neste Engineering. This system is used to produce ethers; the NExTAME unit will produce the preferred high-oxygen gasoline component, which is a mixture of tertiary amyl methyl ether and other heavier ethers used for oxygenate blending (although some ethers, such as tertiary butylmethyl ether, are being phased out due to their poisonous effect on water supplies if accidentally spilled). In addition the French company ISP was chosen to provide its PRIME-G+ desulphurisation technology.

PIPELINE

The oil transportation pipeline (24in) from Mina Al-Fahal to Sohar is able to transport 116,000bpd of feedstock (mixed crude and long residue) (later to be modified to accommodate 160,000bpd). The conceptual study for the pipeline was carried out by Mott McDonald in October 2003.

The front-end engineering and design contract was awarded to ILF and Partner and the project management consultants were Mott McDonald. The contract for the pipeline construction was awarded to Saipem / CCC joint venture. The pipeline was completed in time for the refinery's commissioning in 2006.

INTEGRATED PETROCHEMICAL FACILITIES

A number of other production plants were constructed at the site to take advantage of feedstocks from the refinery. The Oman Polypropylene Plant (OPP) a joint venture of Oman Oil Company, LG Engineering and ABB Lummus cost $200m and was constructed in parallel with the refinery at Sohar.

In addition, a polyethylene plant was constructed adjacent to the new refinery in Sohar by Dow Chemical (50%) in a joint venture with the Oman Oil Company (25%) and the Oman government (25%).

DESULPHURISATION PROJECT

The project involved the installation of an 18,000bpd unit to reduce sulphur levels in fuel oils to 50ppm. The recovered sulphur would be marketed for sulphuric acid production. The project was managed from the start by a team from ORC, the diesel Hydro desulphurisation unit was licensed by Haldor Topsoe A/S of Denmark and the sulphur unit by Jacobs Engineering, Netherlands.

The Front-End Engineering and Design (FEED) was carried out by Granherne and the project construction contract was awarded to SK Construction and Engineering of South Korea for a sum of $32.2m. The construction subcontractor was Bahwan Engineering Co LLC. The project was completed by mid-2006.

PROBLEMS AT THE REFINERY

In October 2007 it was reported that Oman Refining Company had merged with the Sohar Refinery Company to form a single company called Oman Refineries and Petrochemicals Company (ORPC). The Sohar Refinery is also suffering from a number of pre-commissioning problems which have prevented it from working at full capacity.

The plant has had problems with its pipework due to corrosion because the contractor used the wrong alloy in the pipes and it is unable to stand up to normal operations (first discovered in October 2006). JGC and Chiyoda are now replacing large sections of the refinery pipe work and this work is expected to take until 2008. It has been reported that the plant can run at 50%–70% of capacity until the remedial work is completed.

There has also been a design fault with the residual fluid catalytic cracker (no bypass between the crude distillation unit and the secondary units), which has had to be rectified.

The problems with the refinery have meant that the polypropylene plant situated next to the refinery has been short of the propylene feedstock it needs to operate and has had to source supplies elsewhere increasing costs. The cost overrun on the refinery project now stands at $200m.