Oman: New oil storage and export projects take shape

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Extensive plans to shift the focus of Oman’s oil export capacity away from the crowded Gulf waterways are gathering pace, led by the establishment of the newly-formed Oman Tank Terminal Company which will build, own and operate a huge storage facility positioned along the Sultanate’s eastern coast.

The state-owned Oman Oil Company (OOC) said in mid-January it had teamed up with the Takamul Investment Company to establish a firm that will construct and take charge of the new storage facility at Ras Markaz, 70 km south of the oil and petrochemicals hub currently under development at Duqm.

The facility, which will be rolled out alongside a new export terminal, forms part of Oman’s broader bid to carve a niche for itself as a regional hub for oil storage. OOC expects the first stage of the phased project to be operational by 2017.

With a planned capacity of 200m barrels of oil and a connection to the main pipeline network via a 440-km line, the new facility will become the biggest tank farm operating in the Middle East. A second pipeline is set to link the project to a planned refinery and export terminal at Duqm.

While the Ras Markaz facility’s primary function will be to store Oman’s oil, the developers envisage other clients. Nasser bin Khamis Al Jashmi, the undersecretary of the Ministry of Oil and Gas and OOC’s chairman, is confident the location will prove useful to countries doing business across the Middle East and Asia.

“The Middle East, being the largest exporting region, occupies a significant position in the global crude trade, and this will be strengthened in coming years, with increasing trading volumes from this region,” he said at the ceremony held for the signing of the agreement between the OOC and Takamul. “The terminal will attract local, regional and international oil companies, traders and both exporting and importing countries looking for strategic crude storage.”

Until recently, most of the Sultanate’s crude processing and exporting capacity was focused along the coast of the Gulf of Oman, just outside the Strait of Hormuz, the narrow mouth of the Arabian Gulf. However, the waterway, which is used to ship more than 40% of the world’s oil supplies, is becoming increasingly congested, and past threats from Iran to disrupt tanker traffic have given further cause for concern. A storage option that provides the capacity to stockpile supplies on an alternative route-way is expected to prove popular with both producers and their clients.

In a separate move aimed at further shifting the focus of its energy export industry towards its Indian Ocean littoral, Oman announced plans in early February to develop a large loading facility at the port of Duqm, sited inside the Special Economic Zone. The liquid terminal, which is set to handle the stock from the refinery together with incoming shipments of crude, will have the capacity to move up to 230,000 barrels of oil per day.

Reggy Vermeulen, the port of Duqm’s commercial director, said the contract for the design and construction of the terminal would be put out to tender later in 2013. “Our objective is to have the terminal up and running in 2017, in parallel with the targeted launch of the refinery project,” he said.

While Oman hopes to develop its role as an oil storage and export hub, the Sultanate faces competition from elsewhere, including the UAE. The emirates have already constructed a new export terminal at Fujairah, just outside the Strait of Hormuz, with a storage capacity of just over 4m cu metres (mcm), which is expected to increase to almost 9mcm by 2015.

Oman could also feel the impact of a move by Saudi Arabia to reduce its dependence on the Hormuz route. The Kingdom is boosting its ability to ship oil via terminals in its Red Sea coast rather than pumping exports to terminals on the Arabian Gulf.

While the Ras Markaz project has not yet been given a price tag, the initiative is expected to signal many opportunities for contractors and service providers in the energy and transport infrastructure sectors.

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