Oman Refinery Company in US$1.37 bln finance agreement

08-Oct-07

Oman Refinery Company (ORC) has signed a US$1.37 bln financing agreement with local, regional and international banks. The facility repayment profile has been set for more than 10 years with a first repayment in March 2008. The facility will be used mainly to prepay the existing debt facilities at Sohar Refinery Company (SRC) and Oman Refinery Company (ORC) ahead of the merger of the two companies. The government has decided to merge SRC with ORC to create a world-class refining company in the Sultanate of Oman. The merger will be implemented by absorption of SRC by ORC, which will be renamed Oman Refineries and Petrochemicals Company (ORPC). The merger will not result in the creation of a new company, as it will be implemented by transfer of SRC's assets and liabilities to ORC, only ORPC's shareholding will change. ORPC is currently fully owned by the government through the Ministry of Oil and Gas and the Central Bank of Oman. Following the merger, ORPC will be 75% owned by the government through the Ministry of Finance and 25% by Oman Oil Company SAOC. ORC/ORPC will combine the sole two refineries in the Sultanate, the ORC in Mina Al Fahal (Muscat) and the SRC in Sohar. The two refineries are connected by a dedicated 250km pipeline. The Mina Al Fahal refinery (ORC) has been operating since 1982. The plant's capacity has now reached 106,000 bpd following a debottlenecking work completed in April 2007. The refinery produces mainly gasoline, kerosene, gas oil and long residue. The Sohar Refinery (SRC) has a crude unit with a capacity of 116,400 bpd and a Residue Fluid Catalytic Cracking Unit with a capacity of 75,260 bpd. It has been operative since September 2006. The plant is designed to maximise propylene yield. Other products include straight run naphtha, gasoline and jet fuel. All marketing and off-take agreements, currently in place for the sale of ORC's and SRC's products, will be unaffected by the merger as they are entered into by ORC. ORC/ ORPC will sell products in accordance with those existing agreements. Those include the agreement to supply propylene to Oman Polypropylene (OPP), the agreement to supply straight run naphtha to Aromatics Oman (AOL), sales agreements with domestic distributors and an export off-take agreement with Oman Trading International (OTI), a joint venture between Oman Oil (51%) and Vitol (49%).