Kuwait Petroleum signs MoU with Oman Oil to develop the Duqm Refinery and Petrochemical Complex
Oman Oil Company (OOC), the Sultanate’s investment arm in the energy and energy-related sectors, and Kuwait Petroleum International Ltd (KPI), the international subsidiary of Kuwait Petroleum Corporation (KPC), have signed a Memorandum of Understanding (MoU) to cooperate in the development of the Duqm Refinery and Petrochemical Complex. This strategic partnership is part of the efforts being made to seek further investment opportunities that open doors to develop major industrial projects in Duqm.
The MoU was signed on behalf of OOC by Hilal bin Ali al-Kharousi, acting executive managing director of Duqm Holding and Bakheet al-Rashidi, CEO of Kuwait Petroleum International Ltd (KPI), at Crowne Plaza Hotel in the Special Economic Zone in Duqm (SEZD) on November 9.
Under the MoU, both parties aim to reach a long-term partnership to own, manage and operate a refinery and at a later phase, a petrochemical complex in Duqm. It is envisaged that both parties will own equal shares in a joint venture company created for this purpose.
Meanwhile, partners are exploring additional participation from strategic third parties. This project is amongst
the Sultanate’s most significant undertakings to date in the energy and petrochemical field, with the potential
to serve as the springboard for Duqm’s planned transformation into one of the largest industrial and economic
hubs in the region.
Nizar al-Adsani, deputy chairman and CEO of Kuwait Petroleum Corporation (KPC) highlighted the importance of the MoU agreement.
“This potential opportunity exemplifies the spirit of economic cooperation between our two great nations and helps achieve two major milestones, namely satisfying KPC’s strategy of investing in strategic markets, in regions that strengthen and consolidate KPC’s current markets and building strong economic ties with a sister GCC country.”
The Duqm Refinery project is located in the special economic zone in Duqm (SEZD), in the South East Governorate of Al Wusta of the Sultanate of Oman. This gives the project a strategic maritime location and a competitive advantage being in the path of international shipping lines in the Indian Ocean and the Arabian Sea, thus easing the process of transport in and out of the region.
A 900-hectare site has already been allocated for the project and the leveling has been completed as per schedule. The final investment decision (FID) is expected to be made by the second quarter of 2017.
The refinery once completed will have the capacity to process 230,000 barrels of crude oil per day that will serve both local and international markets.
The Duqm Refinery and Petrochemical Industries Company was founded in 2012 as a joint venture between Oman Oil Company (OOC) and the International Petroleum Investment Company (IPIC). This partnership has resulted in the completion of substantial work, driven through the project’s steering committee and the board of directors.
However, IPIC concluded this year that the proposed new direction of the project, which includes petrochemicals, does not fit its investment strategy and decided to pave the way for new partners to enter the project.