Tenders Issued for Five Maintenance Contracts for Oman's Sohar Refinery

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Researched by Industrial Info Resources (Sugar Land, Texas)--Oman's Sohar oil refinery is expected to undergo a maintenance shutdown for 40 to 60 days during the first quarter of next year. Five work contract tenders for repair, replacement and maintenance activities were issued last week. These include replacement of pipeline and heat exchangers, and installation of catalysts. The deadline for bid submissions was August 3. Galfar Engineering and Contracting SOAG (Muscat, Oman) and Larsen & Toubro Limited (BSE:500510) (Mumbai) are among the prequalified bidders for these contracts.

The refining complex has a capacity of 116,000 barrels per day (BBL/d) and is located 250 kilometers northwest of Muscat. The refinery is considered the largest in the country. The government holds an 80% stake in the refinery, while 20% is held by Oman Oil Company SAOC (Muscat, Oman). The refinery is built to process mixed crude and atmospheric residue supplied by Oman Refinery Company (Muscat). The refining complex consists of a 75,260-BBL/d catalytic cracking unit and a 116,000-BBL/d crude distillation unit. A gasoline desulfurization plant, a deep sulfurization unit, and liquefied petroleum gas merox units are also part of the facility. The project was built at a cost of $1.3 billion.

In July 2003, a consortium of JGC Corporation (TYO:1963) (Tokyo, Japan) and Chiyoda Corporation (TYO:6366) (Yokohama, Japan) secured the $880 million engineering, procurement and construction contract to build the refinery. Lummus Technology Incorporated (The Hague, Netherlands), formerly known as ABB Lummus Technology, was appointed the project management consultant. The refinery has been built using the NExTAME technology developed by Fortum Oyj (HEL:FUM1V) (Espoo, Finland). The technology enables production of gasoline components with high levels of oxygen content. LFP (Rueil Malmaison, France) provided the Prime-G desulfurization technology for this project. The 180,000-BBL/d desulfurization unit helps reduce the content of sulfur in the fuel to 50 parts per million. Sulfur recovered from the facility is sold to sulfuric acid manufacturers worldwide.

The Sohar refinery has had a series of operational problems over the years. The pipelines have been severely corroded. The management blamed the contractors for this problem stating that a wrong alloy mix was used for constructing the pipeline. The residual catalytic cracker also faced problems due to faults in its basic design.

Oman is also expected to carry out partial maintenance of its 85,000-BBL/d refinery in Muscat. The country has proven oil reserves of about 5.6 billion barrels, and produced about 728,000 BBL/d of oil at the end of 2008. Due to the maintenance operations at the refineries, Oman may be forced to import refined products to meet domestic demand during the shutdown period. Oman is a low producer of crude, but its product is used as a benchmark for the pricing of 12 million BBL/d of refined crude exported from Gulf countries to Asian markets.

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