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Sizable gas allocation for Orpic’s LPIC project in Oman

The Omani government has allotted 3 million standard cubic metres per day (mmscm3/d) of natural gas as feedstock for the $6.5 billion Liwa Plastics Industrial Complex (LPIC) project currently under implementation by Orpic, the nation’s refining and petrochemicals flagship, at Sohar Port. The allocation, coming amid supply constraints that have limited gas allotments to only vital consumers such as power generation and water desalination schemes, underscores the strategic importance of the LPIC project to the Sultanate’s strategic national goals.

We have been allocated 3.0 mmscm3/d of gas for 20 years by the (Financial Affairs and Energy Resources Council),” said Henk Pauw (pictured), General Manager — Liwa Plastics Industries Complex Project.

Following LPIC’s commissioning, polymers production is forecasted to increase by more than 1.1 million tonnes, giving Orpic a total of 1.4 million tonnes of polyethylene and polypropylene production,” he added in comments to the Observer.

Pauw described the LPIC scheme as the biggest of three strategic growth projects (the other two being the Sohar Refinery Improvement Project SRIP 2016 and the Muscat-Sohar Product Pipeline MSPP 2017), being undertaken by Orpic to achieve its vision of building an Omani integrated refining and petrochemicals business.

Upon commissioning in 2020, Liwa Plastics Industries Complex will transform Orpic’s product mix and business model, double our company’s profit, create new business opportunities, generate significant employment opportunities and support the development of a downstream plastics industry in Oman,” the Pauw stated.
Significantly, natural gas as feedstock for the project will come from Fahud, an important hub from where gas is supplied to major consumers across the northern half of the Sultanate.Pauw explained: “Fahud is the northern Omani hub for gas collection as several gas fields come together, including (BP’s) Khazzan gas, before it goes to the end customers who are mainly in Muscat and Sohar. LPIC’s facility (NGL Extraction Plant) there is a straddling this supply, so we are not relying on one source of gas but have multiple sources.

The project - billed as the largest industrial investment in Oman’s history — is on track with Orpic staff currently deployed at the offices of LPIC’s engineering-procurement-construction (EPC) contractors in Seoul, Milan, The Hague and New Delhi. Following the groundbreaking at LPIC’s Sohar site last month, site preparation and piling have since commenced, he said.
Asked for his take on the potential for downstream investments that capitalize on LPIC’s polymer output, the General Manager said: “This depends on the needs of the local businesses but there are various opportunities to supply services, consumables but also for converting LPIC polymers into new products. Similar clusters in the GCC exist and have shown huge potential for growth.”

Orpic can support the creation of a downstream plastics industry in Oman by providing them with high quality raw materials and also support them with technical expertise, the official further noted. The company’s decision not to secure long-term offtake agreements covering LPIC’s output — a step that’s generally prescribed when tapping international institutions for funding — was a testament to the project’s robust commercial viability, he noted.

This is one of one of LPIC’s achievements that we were able to convince our lenders we do not need offtake agreements. Orpic’s Sales and Marketing team will take care of our products. This is yet another example of keeping as much value as possible in Oman, gain valuable experience to use in other areas and create highly skilled jobs for Omanis,” Pauw said.

With the highly integrated complex in Sohar including the Refineries, Aromatics Plant, Steam Cracker and the downstream Polypropylene and Polyethylene Plants, the operation will be one of the best-integrated refinery and petrochemical facility combinations in the region,” the Pauw added.

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