Aramco, Oman's OQ ink agreement on potential feedstock supply to Duqm refinery

The trading arm of Saudi Aramco has signed an agreement with Oman's state-owned energy company OQ to explore the potential supply of feedstock to the Duqm refinery and petrochemical project.

Under the non-binding memorandum of understanding, Aramco Trading Co. and OQ "intend to collaborate directly or through their affiliates on exploring business prospects in the Omani port of Duqm and nearby crude oil storage terminal of Ras Markaz," OQ said in a Dec. 6 statement.

"The parties will undertake a joint review of ATC supplying feedstock to Duqm Refinery & Petrochemicals Industries Company LLC (OQ8), as well as possible offtake of oil products by ATC from OQ8."

Both companies may expand the scope of the MoU to include renewables, waste stream, green ammonia as well as green hydrogen, the statement added.

ATC trades in crude oil, refined products, LNG and LPG, blending components, bulk petrochemicals, and polyolefins.

Duqm free zone

Oman is developing the Duqm freezone southeast of the country to become a major energy hub for the Middle East's biggest oil producer outside OPEC.

Oman's 230,000 b/d Duqm refinery is expected to come online in the first quarter of 2023, the head of project management at the facility told state-run Oman News Agency on Oct. 30, as the Gulf country seeks to process crudes other than its own.

Construction of the refinery is 87% complete, Yousuf Al-Jahdhami told the agency.

The refinery, which will cost more than $8 billion, has faced numerous delays since construction started in 2018.

The facility is a 50-50 joint venture between OQ and Kuwait Petroleum International (Q8), called Duqm Refinery and Petrochemical Industries Co. (OQ8).

Once operational, Duqm refinery will receive 65% of its crude volume from Kuwait, and the remaining 35% will be Omani crude, with both grades stored at the Ras Markaz Oil Storage Park in the Duqm Special Economic Zone.

The refinery will mainly produce diesel, jet fuel, naphtha and LPG, Jahdhami said.

Ras Markaz oil storage

Oman is putting the finishing touches on Ras Markaz Oil Storage Park, the Duqm Special Economic Zone said in a Aug. 15 tweet, that can eventually hold more than 200 million barrels as the country seeks to attract international oil companies to park their cargoes in the country.

Ras Markaz Oil Storage Park will have an initial capacity to hold 25 million barrels starting in Q1 2022, Salim al-Hashmi, project general manager at developer Oman Tank Terminal Co., told the zone's Duqm Economist Magazine in its quarterly issue published in July.

The storage park will be connected to Duqm refinery through an 80 km-long pipeline and eight tanks built to store the facility's oil.