(MENAFN- Muscat Daily) Muscat- Salalah Methanol Co (SMC), a wholly-owned subsidiary of Oman Oil Co, on Monday celebrated the financial closure for its Salalah ammonia plant.
Salalah ammonia plant is a sustainable project that will significantly contribute to the development of downstream sector in Dhofar Governorate and Oman's diversification plans.
A ceremony, held at Grand Millennium Muscat, was attended by Eng Isam al Zadjali, CEO of Oman Oil Co. Also in attendance were representatives from the government and private sectors, as well as a number of local and international financial institutions.
SMC successfully secured a 12-year US$728mn recourse project finance facility (which has been oversubscribed around 2.5 times of required amount) from a mix of international, regional and local financial institutions. The facility will be used to refinance SMC's existing debt, while the remaining US$443mn to be allocated to the development of the ammonia plant.
Highlighting the importance of the ammonia project, Zadjali said, 'This vital project is in line with the economic diversification of the sultanate and part of Oman Oil Co's growth strategy, which aims to contribute to value creation. Setting up the ammonia plant is an important milestone for high value-added petrochemical industries and key to opening up for new further downstream industries, and the creation of job opportunities.'
Awadh al Shanfari, SMC's managing director, said: 'Salalah ammonia project has been able to successfully secure limited recourse financing amid challenging global economic conditions. This reflects the trust that financing institutions have placed on the project and the financing structure, which is demonstrated by the fact that the lending group comprises of local, regional as well as international lenders.'
A total of 12 international, regional and local financial institutions provided the debt component of the project finance. The line-up comprises: Export Development Canada, Bank Muscat, BankDhofar, Standard Chartered Bank, Société Générale, ING Bank, Ahli Bank Oman, Europe Arab Bank, Bank Sohar, Qatar National Bank, APICORP and National Bank of Kuwait.
SMC also commemorated the signing of sub-usufruct agreement and easement agreement with Salalah Free Zone allocating around 12 hectares for the project at the free zone. Also, the right of way agreement and port facilities agreement were signed with Port of Salalah. The ammonia off-take agreement was signed with Oman Trading International (OTI).
Salalah ammonia project will include setting up associated utilities, export facilities and off-site infrastructure. Construction is scheduled to start during the fourth quarter of 2017 and expected to end during 2020; with a production capacity of 1,000MT per day of anhydrous liquid ammonia.
The ammonia plant will be utilising the methanol plant's hydrogen rich by-product gas as feedstock making it capable of producing ammonia with great energy saving. By utilising purge gas from the methanol plant, the ammonia plant requires significantly less capital expenditure when comparing to a greenfield ammonia plant of similar capacity, making it a highly competitive producer globally. Salalah ammonia plant's products will target Southeast Asian markets such as India, Vietnam, Thailand, South Korea and Japan.
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