A massive crude oil storage hub planned by the government at Ras Markaz near Duqm could also serve as an alternative export terminal for Omani crude, according to the Under-Secretary of the Ministry of Oil and Gas. Nasser bin Khamis al Jashmi said a second export terminal would help provide a ready outlet for Omani crude in the event of supply disruptions affecting the nation’s only crude export terminal at Mina Al Fahal in Muscat Governorate.
The Under-Secretary was speaking to journalists after yesterday’s signing of a landmark Memorandum of Understanding (MoU) that will pave the way for the establishment of what is billed as the world’s largest crude oil storage hub at Ras Markaz on the Wusta coast.
The giant facility which, at full capacity will store up to 200 million barrels of crude, is planned to be developed in phases by Oman Tank Terminal Company LLC (OTTCO), which has been set up by Oman Oil Company SAOC (OOC), the wholly government owned energy investment vehicle, in partnership with its downstream investment subsidiary, Takamul Investment Company. OTTCO is owned 90 per cent by OOC and 10 per cent by Takamul.
“Part of the MoU’s purpose is to consider in the future the potential to use Ras Markaz as a second crude oil export point for Oman,” Al Jashm said. “This option will be studied not only from a strategic point of view, but also in the event if there are any disturbances — natural or of other different kinds — then we have a second export point (to fall back on). Duqm is also an ideal place for strategic oil storage in such kinds of (adverse) situations.”
Also as part of its brief, OTTCO will also build a new crude oil pipeline that will link Oman’s Main Oil Line in central Oman with the Ras Markaz Terminal. The 440km-long pipeline, whose capacity will be determined as part of a broader study of the storage hub project, will travel from Nihayda to the Duqm coast. Nihayda is where Omani crudes pumped from different fields is collected and mixed to form the Oman blend before it is pumped via the Main Oil Line to Mina al Fahal for export.
“This proposed pipeline from Nihayda to Ras Markaz will also serve as a second export line for Omani export crude,” the Under-Secretary stated. Another 70km-long crude pipeline with link the terminal with a new 230,000 barrels per day refinery planned at the Duqm Special Economic Zone. DRPIC, a 50/50 joint venture of Oman Oil Company (OOC), and IPIC, a commercial entity owned by the Government of the Emirate of Abu Dhabi, is developing the greenfield refinery with an investment of around $6 billion.
Asked about potential demand for crude storage capacity at the Ras Markaz terminal from Gulf states concerned about possible shipping disruptions in the Strait of Hormuz or Upper Gulf, Al Jashmi said: “At the present time, we are focusing on completing all the studies before we take any (expressions of) interest seriously. We want to make sure that all of the elements of the project are studied before we look at any potential interest. Yes, we have been receiving interest in the project from time to time, but we’re not entertaining these until the studies are finalised.”
According to Martijn Notten, OTTCO’s Project Director, the Ras Markaz terminal could also store other petroleum products in the future. “The storage terminal is mainly for crude oil products, but it might be that we will also store in fe uture other products. But this is more dependent on the cargo sizes and the size of the vessels (calling at Ras Markaz).” A technical feasibility study, which would help throw light on the capacity and investment costs of the project, is nearing completion, he said. Front-end engineering design (FEED) work and actual construction will commence only once firm contracts are agreed.
“We will start with the Oman government with regard to their storage needs. We are also talking to the Duqm refinery about their interest and need for storage. Ultimately there will be signed contracts that justify the FEED, and only then we will start the construction.” In parallel with the FEED study, OTTCO will also study the environmental and social impact of the project on that part of the coast as well as local communities, he added.