Significant Milestone Reached for the Refining and Petroleum Industries with the Award of Sohar Refinery Improvement Project Contracts
Orpic (Oman Oil Refineries and Petroleum Industries Company) has announced the award of the Engineering, Procurement and Construction (EPC) contracts for its Sohar Refinery Improvement Project (SRIP).
According to the Orpic statement to Oman News Agency (ONA) that after obtaining the necessary Environmental Permits for the project, and following the tendering process, the EPC contracts have been awarded to Daelim Industrial Company & Petrofac Engineering & Construction (JV). Orpic has awarded Long Lead Item (LLI) contracts to ATB Calzoni, GE Oil & Gas, Howden Thomassen, and Flowserve. All of these companies have long experience in executing similar projects. The new units are expected to be completed by December 2016.
SRIP is a response to the need to upgrade refining capability in order to manage the change in the nature of Omani crude oil, and further maximize the value of the refined petroleum products. At the same time, it will significantly improve environmental performance on the back of the progress made by Orpic’s Environmental Improvement Programme (EIP), which was initiated by the company in 2011. SRIP will help in meeting the increasing demand for petroleum products. The Sohar Refinery Improvement Project is one of three strategic projects that Orpic will implement between now and 2018, the other two being the Muscat-Sohar Pipeline Project (MSPP) and the Liwa Plastics Project (LPP).
Capacity is also addressed within SRIP as it will allow an increase in the refinery’s overall production levels. Fuels, propylene and naphtha production will rise by 70%. This increase will provide the answer to the continuing growth of fuel consumption in the country, which has grown by 10% to 15%annually over the past 5 years. In addition, the increased supply of feedstock flowing from the Sohar Refinery to Orpic’s Polypropylene Plant will enable the latter to reach its full production capacity for the first time. Another first will be the ability to produce bitumen from the Orpic Sohar complex. Bitumen is used primarily to manufacture asphalt and is increasing demand in the Sultanate for infrastructural projects. The increased supply of naphtha that results from SRIP means that that the amount purchased by Orpic will also reduce from 75% to 25% of its total requirement.
Aside from the immediate commercial benefits that SRIP brings to the business, it will have further positive impacts in other areas; 300 direct, permanent jobs will be created by SRIP contractors, as well as provision of hundreds Omani contract roles over the project lifetime. The company have started to implement intensive training and qualification programs for 100 new graduates annually since 2011 with a total of 230 trainees to date. The programme lasts no more than 18 months, after which trainees join different technical and administrative functions, based on the company’s human resources strategy for the planned development projects.
In addition, SRIP will continue to promote value-added not only to the local but also now to the national economy. In the past two years, Orpic has committed 10% of its Oman contracts and procurements to the Al Batinah Governorate. Now with SRIP, Orpic are looking to channel 15% of the project value directly to drive the in-country value factor. That means around US$375 million directly stimulating the national economy.
There is a clear commitment to encourage projects related to local value added. The company aims to give priority to local companies in contracting them for procurement and other services. In order to strengthen its partnership with the community on this subject, Orpic initiated a strategy in 2011 that provides local community businesses with many commercial opportunities along with a support mechanism to help implement this objective.
The strategy aimed to provide local markets in North Al Batinah Governorate with the potential to supply 10% of Orpic’s annual purchases, estimated at $300 million. Orpic has eased the registration procedures for the local contractors and made tender documents readily available. Since 2012, Orpic has approved three outlets through which to announce its tenders, namely the Oman Chamber of Commerce and Industry, Orpic’s community office in Falaj Al Qabail and Al Batinah Portal website, managed by the OCCI’s branch in Sohar, North Al Batinah.
Besides these initiatives, Orpic sponsored the annual SME symposiums held in January this year in Sohar and Muscat, coordinated by the Oman Chamber of Commerce and Industry. The company is also working on an ambitious plan that starts with hosting a Vendor Symposium in Sohar this December, with the objective of highlighting the opportunities for projects and services required by Orpic in 2014.
Orpic will also develop a detailed In-Country Value plan related to the Sohar Refinery Improvement Project (SRIP). This plan is being developed in collaboration with the main contractor for the project. We seek to complete this plan by the end of December 2013.
SRIP is a project primarily designed to increase Sohar Refinery’s capability to manage the change in characteristics of Omani crude oil, and meet local demand for petroleum products. However, Orpic has allocated a specific percentage of SRIP’s total value to fund social responsibility programmes in the Governorate of North Al Batinah, which will benefit the area socially and economically.
Orpic’s commitment to Corporate Social Responsibility has already resulted in many programmes being initiated in the local community, either directly by the company or indirectly through Jusoor, Orpic’s CSR delivery partner. These include funding a Drug Rehabilitation Hospital under the auspices the Ministry of Health, and Sohar, Majees and Al Salam sports clubs with the aim of developing their services in the interests of society. The projects that the company is supporting have directly contributed to the development of various educational, health and social facilities in the area.
Orpic’s initiatives have not just been limited to in-community support through its various local programmes. This year, Orpic organized visits for Sohar and Liwa community leaders to refineries in the Netherlands, Slovakia and Hungary. The visits aimed to give first-hand experience to the Sohar Refinery’s close neighbours of equivalent communities in these countries and the relationship between local refining industries and nearby villages and towns.
Since the integration of the four plants, Orpic has focused on improving the environmental performance of its operations. Recently the company officially marked the decrease of gas flaring by 60% since 2011, and of sulphur dioxide emissions by 80% since 2012. Two other projects, Spent Catalyst Removal and Waste Water Treatment, are both in progress, and already demonstrating positive environmental impacts. Detailed results will be announced in the near future. Orpic will take this commitment to the environment even further, with additional protection measures an integral part of the improvement project design.
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