The Salalah Free Zone (SFZ) last week signed a “usufruct” deal to construct a 150,000 b/d refinery in Oman’s southern city of Salalah. The agreement for the $2.5bn (OM 962mn) refinery was signed between Salalah Free Zone and the CEO of Salalah Refinery, and notably doesn’t yet include any party with downstream experience. There had been no prior indication that Oman was pursuing a refinery project in the country’s third city. Usufruct is a legal term implying a legal right to make use of another’s property.
Oman has established four free trade zones – Al Mazunah, Sohar, Salalah and Duqm – as part of a push to develop its non-hydrocarbons activity. But so far oil, gas and petrochemicals have provided the keystone projects. At Duqm, Kuwait Petroleum International and Oman Oil Company are currently building a 230,000 b/d export refinery on a 50:50 JV basis which will further boost Oman’s 303,000 b/d refining capacity (MEES, 31 August 2018), already more than ample to supply the domestic market (MEES, 26 July). Any Salalah plant would also presumably be aimed at exports given the small local market. (CONTINUED - 267 WORDS)