Tell us more about your projects in Oman.
The Muscat Sohar Product Pipeline (MSPP) is one of Orpic’s strategic growth projects that will enable the company to fulfil its vision of building an Omani integrated refining and petrochemical business. The three projects — Sohar Refinery Improvement Project (SRIP) due to be completed in 2016, Muscat Sohar Product Pipeline (MSPP) set to come on stream in 2017 and Liwa Plastics Industries Complex (LPIC) scheduled for commissioning over the next four years — will increase the value obtained from the oil and gas molecules produced in Oman.
The MSPP and Al Jifnain Terminal project is our response to key objectives set by the government for the oil products logistics activities in the Sultanate. These include building additional facilities to meet the rapidly growing demand for fuels; facilitating the distribution of additional production available once SRIP enters into commercial operations later this year; improving road safety in the capital, and supporting the expansion of Muscat International Airport.
In the last 10 years, fuel demand has grown at rates above 10% per annum and — despite low crude oil prices and the increase of prices of refined products in Oman since January 2016 — it is expected that growth will be maintained in the coming years.
The new 18” pipeline between Sohar Refinery and Al Jifnain Terminal will ease the distribution of oil products along the north coast, which comprises above 50% of oil products of the country.
The terminals located in Mina Al Fahal, Muscat supply above 65% of the country´s demand for oil products. Once MSPP is completed most of these supplies will be shifted to Al Jifnain Terminal, reducing the heavy tanker traffic in the capital area.
The MSPP pipelines will directly connect Al Jifnain Terminal with the new storage depot at Muscat Airport meaning that the jet fuel will be pumped directly from Al Jifnain without the need for tanker trucks and increasing the safety of the jet supply to the airport.
You have invested heavily in a new storage and distribution centre. How is the project progressing? Are you expecting any delays?
The project implementation is being done through an Engineering, Procurement, and Construction & Commissioning (EPCC) contract. It is progressing as expected thanks to the effort and professionalism of both Orpic Logistics and the contractor’s team, as well as the philosophy of working together towards achieving the same goals. As of end of July, the project achieved a progress of 59% on overall basis, with engineering, procurement and construction at 99%, 76% and 50% respectively.
It also needs to be highlighted that the whole organisation is getting ready to operate and maintain the MSPP assets. This preparation is crucial to ensure that the effect of the project is noticed by our customers and stakeholders. The pipelines and the Al Jifnain Terminal of the MSPP Project are expected to be fully operational by mid-2017.
What sort of business benefits are you expecting to see once the facility is up and running? And can you give us an estimate for its expected capacity?
The new terminal in Jifnain will be able to store 172,000 m3 of refined products raising storage capacity of the country by 70%. This additional capacity will enhance the alternatives for not disrupting fuel supply to the population in case of any incident.
Additionally, the new terminal will be equipped with 16 loading bays capable of loading more than 600–700 trucks per day, with products to be transported across petrol stations. It also needs to be highlighted that the new terminal will be supplied by two multiproduct and bidirectional pipelines connected to Orpic’s Sohar and Muscat refineries, which are the safest and most efficient transport media for oil products for medium distances.
Furthermore, the location of the new terminal in Al Jifnain will optimise cost by as much as 24%.
The storage and logistics sector in Oman is growing significantly – should we expect Orpic to play a key role in this growth?
Orpic’s vision is to consolidate all logistics assets in order to significantly increase the efficiency of operations as well as its safety. This consolidation would also help develop new competencies that would offer attractive jobs to talented Omanis.
The first step of the new logistics system projected by Orpic — the MSPP project — has been designed to optimise the global costs of transport and distribution of oil products in Oman, including vessels, tankers and power used in pipelines.
As a second step, Orpic is studying the construction of one million cubic metres (m3) of additional storage capacity in Jifnain to start the development of the national strategic reserves. This volume is equivalent to more than 30 days of oil products consumption and would further increase the security of supply to the population.
What sort of logistical challenges do you currently face and how are you seeking to overcome them?
Orpic’s approach to manage these type of contracts is to maximise the support provided and the cooperation and integration of both the contractor’s and Orpic’s teams. In the end, we share common objectives and their success is our success and vice versa. From an execution point of view, the main challenges we are facing are obtaining permits and ensuring on-time delivery of equipment and materials that are mainly coming from Oman but also from other parts of the world such as South Korea, Italy, the United States, Spain, Germany, Greece, India, etc.
And finally, what is the significance of optimising fuel transportation networks in Oman in particular, and the Arabian Gulf in general?
Nowadays, several logistics assets that are facilitating the distribution of oil products to the population are owned and managed by several parties, not always with the same type of objectives and not necessarily having a common understanding of the requirements for the country. The integrated model for fuel transportation, storage and distribution that Orpic is projecting would optimise the costs of the whole system, standardise the processes and provide a better service to our customers as high level of automation and technology is being envisaged to optimise these activities.
