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Port of Duqm drives downstream projects for Oman’s refinery

Port of Duqm drives downstream projects for Oman’s refinery

Jun 18, 2017
5 min read
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Erwin Mortelmans, commercial director, Port of Duqm speaks to Pipeline Magazine’s Nadia Saleem in an exclusive about the port’s master plan and upcoming projects for ancillary businesses to facilitate the Oman refinery

The Port of Duqm is Oman’s single, biggest economic project, which aims to diversify its economy away from oil. It connects the East and West, with proximity to major shipping lanes and major markets. Duqm authorities are offering incentive packages to investors and developers for the entire zone as the country moves to diversify its economy away from oil dependency. Mortelmans says the key success factors of the port are its 18 metres deep draft, its green-field status, ability to be molded for any project, ample land and jetty availability, a massive captive market and a healthy mix of industries to be served. A 50-50 joint venture between the Oman government and the Port of Antwerp lead consortium, the Port of Duqm is also connected to large neighboring ports such as UAE’s Jebel Ali port and Oman’s Salalah and Sohar port. In early April, Oman Oil Company and Kuwait Petroleum International signed an agreement to build a 50-50 joint venture refinery worth around $7 billion in the sultanate’s southern port town of Duqm. The refinery will have a capacity of 230,000 barrels per day when completed and will be part of the vast industrial zone. Much of the port’s development plans are based on back of the refinery by means of downstream projects, which will serve to diversify oil revenues for Oman as well as Kuwait.

 

Could you give an update on the progress of the multiple oil and gas related projects at the Port of Duqm?

Port of Duqm will function primarily as a storage facility in the first phase, feeding the refinery that will come into commission in 2021 and facilitate exports. The ambition is aligned with refined products - there will be an offsite storage facility for diesel, naphtha, Jet Fuel, LPG and dry bulk materials with a capacity of half a million cubic meters of refined products. For an eye on future storage, we’ve allocated a land base for terminal developments. We’re currently under discussions to decide which terminal companies will become the developers. On the one hand they will store refined products, while other businesses could be downstream or other types of storage. Additionally, the port authority has more land for liquid and gas development - bulk, LPG or imports of LNG. These are the areas we are looking at now and inviting companies for.

 

What is the timeframe for the contracts coming up?

The commission of liquid build jetties is seen within 36 months from now, which is more or less in line with the refinery start up and offsite storage. That is where we are at the moment and that will be expected for refinery and also other elements. At Duqm, we can accommodate any kind of related business, such as petrochemical facilities, and service them at our ports.

 

What role can the Port of Duqm play in the Middle East region? How can it impact shipping lanes?

We are at a feasibility stage and would need to obtain more complete data to say what impact it can have on shipping volumes for example. Since the deviation of current shipping lanes is limited, we believe there is a value proposal there. Location is one. The fact that we can offer an uncongested offering, it is a benefit. Being away from the Strait of Hormuz is another benefit. Offering bunker fuels to passing vessels could be another opportunity. Vessels that go all the way to Fujairah, won’t have to do that when Duqm facilities are made available because of the substantial cost savings.

 

What will be the infrastructure’s capacity to store refined products?

The first terminal is for planned storage of diesel, jet fuel, Naphtha and LPG primarily. We are welcoming business proposals from other parties as well because we have ample land available for storage of liquid bulk products or gases. What is the significance of the refinery for the Port of Duqm? It’s very important and will become the key anchor tenant, almost crucial to put Duqm on the map. That is a fact realised by all the stake holders, including Oman’s government. That’s why the priority is high and I’m positive the development of the refinery will go ahead despite the difficult market conditions. The fact that the dredging and the liquid jetty contracts were awarded to meet the timelines of the refinery, is a strong signal that the project will proceed. It’s a necessary first step to meet the project timeline.

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