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Oman’s New Refinery Could Begin Processing Heavier Crude Soon

Oman’s new refinery could begin processing heavier crude grades by the end of the year after feasibility studies are completed, the refinery’s chief executive David Bird told Reuters on Wednesday.  

“That was thought of in the process of design, to make sure we could process some of the heavier, more sour crudes,” Bird told Reuters, weeks after Oman inaugurated earlier this month its new 230,000 barrels per day (bpd) refinery, which has direct access to the Indian Ocean.

The location allows its exports of refined products to not pass either through the Red Sea or the Strait of Hormuz, the critical waterway chokepoints for petroleum trade in the region. 

“Towards the latter half of 2024 and beyond we will be looking at a full merchant refinery model of processing advantage crudes,” Bird told Reuters.

The $9 billion Duqm Refinery on Oman’s eastern shoreline is a joint venture between Oman’s state energy firm OQ Group and Kuwait Petroleum International (Q8). The refinery, OQ8, began trial runs last year and is now operating at full capacity, producing diesel, jet fuel, naphtha, and liquefied petroleum gas (LPG). Its current crude slate is 65% Kuwaiti crude and 35% Omani crude.

The strategic coastal position on Oman’s eastern shoreline is an advantage to the new refinery as it grants access to the major international maritime routes of the Indian Ocean and Arabian Sea.

The new Omani/Kuwaiti refinery in Oman wants to use its strategic position outside the Middle Eastern chokepoints to provide an alternative route for some Middle Eastern products to reach other markets. The operators of the refinery also plan to increase storage capacity to enable it to store tens of millions of barrels.  

So far, the refinery has exported 100 cargoes of fuels globally, and many of the volumes have gone to the Indian subcontinent and the east coast of Africa. 

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“Because of the proximity to those markets we are very competitively positioned to serve them,” Bird told Reuters.

By Tsvetana Paraskova for Oilprice.com

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