Oman’s Duqm refinery finds plenty of buyers before official start

Oman's Duqm, the last of several new refineries to open in the Middle East recently, has found plenty of buyers as rulers from both Oman and Kuwait marked its commercial kick-off Feb. 7 after six years of development.

Destinations for its oil products in recent months have ranged from the US to Italy, the Netherlands, Uruguay, Madagascar and China, according to S&P Global Commodities at Sea data. Refineries in the region have been focusing on stepping up diesel exports to Europe to fill the gap left after the EU's embargo on Russian oil products in 2023 because of its invasion of Ukraine.

"The online of Oman's Duqm refinery marks an end to the current wave of greenfield refinery expansions in the Middle East region, among them Saudi Arabia's Jazan, Kuwait's Al-Zour and Iraq's Kerbala," said Dong Wang, Middle East oil markets senior analyst at S&P Global Commodity Insights. "The online of Duqm will significantly increase Oman's ability to export diesel and using its strategic location to cover both east and west, and particularly the emerging Africa market."

Dominant buyer

China is the dominant buyer of Oman's crude, often taking more than 90% of its monthly oil exports. Total product exports from Duqm climbed to 197,000 b/d in November 2023, from 19,000 b/d in February 2022, CAS shipping data showed. The refinery has production capacity of 230,000 b/d and is focused on middle distillates such as jet fuel and gasoil along with diesel.

It's the second refinery in the region to mark a special occasion this week. Kuwait's mega Al-Zour refinery hit maximum production capacity of 615,000 b/d for the first time Feb. 4 after four years of testing to create the Middle East's biggest refinery. Al-Zour has been called a "diesel machine".

Oman's Sultan Haitham bin Tariq and Kuwait's emir Sheikh Meshal al-Ahmad al-Sabah attended the Duqm opening ceremony Feb. 7, a spokesperson said. The refinery is a 50-50 joint venture between Kuwait Petroleum International and Oman's OQ.

Al-Zour is designed to process various types of Kuwaiti crude, while Duqm can process several blends and grades.

Oman Export Blend crude has 1.29% sulfur and carries a gravity of 33.2 API, competing with other grades such as Upper Zakum from the UAE and Urals from Russia, according to the Platts periodic table of oil. Kuwait Export Crude has 2.6% sulfur, gravity of 30.5 API and competes with Qatar's Al Shaheen and Iraq's Medium grade.

The $9 billion Duqm refinery is described as the largest investment of its kind between two Gulf countries and located on Oman's eastern coast to take advantage of major international maritime routes in the Indian Ocean and Arabian Sea.