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Saudis Weigh Offer to Participate in Oman Refinery

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Mohammed bin Hamad al-Rumhy

Saudi Arabia is weighing an invitation to become a partner in Oman's Duqm refinery, which is expected to be brought on line in the first quarter of 2023, Oman's Energy Minister Mohammed al-Rumhy told Energy Intelligence in an interview.

The 230,000 barrel per day refinery — being built on the Arabian Sea coast in central-eastern Oman — is currently a 50-50 joint venture between Oman's state-owned OQ and Kuwait Petroleum International, the international downstream arm of Kuwait Petroleum Co.

Al-Rumhy said he and Saudi Investment Minister Khalid al-Falih met in Oman in August and discussed the possibility of Saudi Arabia building a crude oil pipeline from the onshore Shaybah field in eastern Saudi Arabia to the Duqm refinery.

The pipeline would be capable of supplying around one-third of the feedstock processed at the refinery, which would cost less than shipping crude by tanker from Kuwait at the northern end of the Mideast Gulf — a journey that involves passing through the Strait of Hormuz.

"One offer which I suggested to Minister al-Falih is for Saudi Arabia to join the Duqm refinery project with Oman and Kuwait … He liked the idea and promised to crunch the numbers and get back to me," said al-Rumhy.

The Omani minister added that the two men also discussed the possibility of Saudi Arabia participating in green hydrogen projects in Oman.

Al-Rumhy said the latest proposal for a pipeline from Saudi Arabia to Oman follows a similar plan that was discussed in the past but ultimately shelved because it was not considered to add sufficient value.

A pipeline connecting the neighboring Gulf states would reduce dependence on the Strait of Hormuz — a bottleneck for marine traffic through which most of the Mideast's oil and LNG exports currently pass.

The Duqm refinery would take 80,000 b/d of crude oil feedstock via the proposed pipeline — roughly a third of the plant's total needs. But the pipeline could be designed with a capacity as high as 800,000 b/d, potentially allowing Saudi Arabia to export oil to third countries via Oman.

Saudi Arabia "could also take advantage of Ras Markaz," al-Rumhy said. In addition to the refinery, the Duqm Special Economic Zone has storage facilities with an initial planned capacity of 25 million barrels, which will be connected to the refinery by a pipeline.

Topics:
Oil Pipelines, Refining
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