- The Duqm refinery in Oman is the region’s first cross-border refinery investment
- The recently inaugurated Omani–Kuwaiti oil refinery joint venture (JV), the first cross-border refining investment in the region, has opportunities to innovate, its first independent CEO told Zawya.
- David Bird, who heads the Duqm Refinery, a 50-50 JV branded OQ8 involving the Oman Oil Company and Kuwait Petroleum International, said the refinery can avoid rigidity in its ways of working with “its own strategy and outlook that can stimulate the shareholders”.
He said while national oil companies working alone may have a singular view on the world, whether that is in a growth agenda or increased capacity, OQ8 benefits from the inputs of both the Omani and Kuwaiti partners.
“We have access to incredible capability and the ability to try new things,” he said.
OQ8 could be the most competitive supplier for the growing markets of India and East Africa, with Sri Lankan and sub-continental markets already tapped, and OQ8 products having already made their way as far afield as Brazil and the US Gulf Coast Bird, he said.
OQ8 is already meeting fuel quality specifications in different markets which are being ‘ratcheted up’ at different speeds, he said.
The Duqm Refinery, situated on the Omani coast along the Indian Ocean, receives 65% Kuwaiti crude and 35% Omani crude. Duqm was once a subsistence-based fishing village, but now with a port, dry docks and the refinery, it is growing.
OQ8’s output includes liquid petroleum gas (LPG), naphtha, petrochemical feedstock, jet fuel and diesel, with a capacity of 230,000 barrels per day, making it a medium-sized refinery compared to those with a capacity of 500,000 to 600,000 barrels per day.
The refinery was inaugurated earlier this month after test phases last year. It is currently refining medium crude, Bird said, but can also refine heavier crudes with higher levels of bitumen and asphalt thanks to investments into the plant’s technology.
When the plant was first conceived seven years ago, there was more “traditional thinking” around where exports would go, specifically Europe and Asia.
A post-COP28 Gulf refinery
But why invest in a new $9 billion oil refinery at a time when the need to reduce carbon emissions to combat climate change is a constant refrain?
“You would not tolerate 70-year-old cars clunking around on the road, so why would you with a refinery?” said Bird.
For him, it’s a question of bringing efficiency to the manufacture of products the world is still reliant on, echoing remarks by the OPEC Secretary General at the World Governments Summit in Dubai this week.
“It is important to remember that at COP28, the pledges were equally energy efficiency and renewables, and that is sometimes lost when it comes to renewed investment in oil and gas infrastructure,” he said.
The average age of a US refinery is 70 years old, he said, with new units added over time, without being able to consider efficiency, optimise upgrading with new units added next to existing ones as they expand.
“We could take that efficiency into account from the very beginning, to maximise heat integration and energy recovery and energy efficiency,” he said. “Most importantly, the technology has evolved.”
Older refineries see steam leaks and involve the controversial gas flaring technique of burning off natural gases, he said. “You don’t see that with ours: there’s no flaring, there’s no steam leaks, it’s just a modern plant that took integration and efficiency into its design and then used the best available technology.”
Red Sea impact
The Red Sea attacks have continued this week, with the latest, on a Greek-owned vessel, reported on Monday.
Vessels approaching and leaving OQ8 do not need to pass through the Red Sea thanks to its location in the Indian Ocean; nevertheless, Bird said, the crisis had impacted business because of the impact on trade flows.
Refining is a “multi-stakeholder trade flow” involving a source, the market or customer, the ship owner and insurers, who all bear the risk when there’s a triggering event, he said.
“I think the world is on edge,” he said, noting that the Red Sea is one of several risks that can add to volatility and challenge any organisation, including cyber security and the implementation of new tariffs.
Source : Zawya
