GENERAL & ECONOMIC NEWS

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Orpic’s Muscat-Sohar Product Pipeline (MSPP) has achieved a milestone of 5 million man hours without Lost Time Injury (LTI). With more 2,000 personnel on board, MSPP is one of the key strategic growth projects which is scheduled for commissioning in 2017.
Andres Suarez, General-Manager — Orpic Logistics, Orpic, said, “Safety is our number one priority. We have a diligent and experienced team who is committed to ensuring the construction and future operation of this project is achieved to its highest standards. We believe that all incidents can be avoided. We have a wide range of tools to help us but it all starts with our attention and commitment. We believe that tomorrow is our reward for working safely today.”
The Muscat Sohar Product Pipeline is an important investment for Orpic. In addition to meeting the domestic demand for fuels, which is growing at approximately 5-10 per cent per annum, this project will deliver numerous social, economic and environmental benefits including job growth, improved road safety, increased jet fuel supply, logistic efficiencies, and reduced pollution resulting from lower truck movements.
Along with this significant milestone, Orpic Logistics celebrated the first edition of the MSPP Safety Award For Excellence (SAFE) programme by recognising 15 employees from contractors and subcontractors for their observance, respect and implementation of health, safety and environment (HSE) policies across the project. This award will be celebrated each time the project achieves an additional 1 million man-hours without LTI.

Budget deficit of Oman surged ahead by 82.6 per cent to OMR3.5 billion for the first half of 2016, compared to the same period of last year mainly due to falling oil revenues. The country’s oil revenue fell by 47.7 per cent to OMR1,489.3 million for the first half from OMR2,846.8 million for the same period of 2015, according to data released by the National Centre for Statistics and Information (NCSI).

The Sultanate has projected a deficit of OMR3.3 billion in the current year’s budget.

Although the country’s crude oil production rose by 3.2 per cent to 213.9 million barrels in the first seven months, the average price of Oman Crude in the international market plunged by 39.3 per cent to $36.4 per barrel for the first seven months of this year from $59.9 a barrel for the same period of last year. Similarly, the average daily production of crude moved up to 1,001,900 barrels a day, from 975,000 barrels per day for the same period of last year, the NCSI report added.

The number of visitors to Salalah during Khareef season stood at 582,736 as of August 21 recording a surge of 22.9 per cent compared to figures for the same period last year, according to data released by the National Centre for Statistics and Information (NCSI).

Visitors from the Sultanate came first in terms of the number of tourists by nationality and they numbered 433,959 comprising 74.5 per cent of the total crowd. Emiratis came second with16.3 per cent, Saudis stood third and Qataris came fourth.

The NCSI statistics showed that 81 per cent of the Khareef visitors came by land compared to 19 per cent, who took a flight.

The survey of Khareef visitors will continue till September 21.

Besides the unique weather in Governorate of Dhofar during Khareef “Monsoon season,” visitors to the governorate enjoy craft industries and handmade products on offer at many outlets at traditional markets in Salalah.

The items on display at the various markets in many areas in Salalah symbolize the governorate’s rich history and culture. Dhofar has been known for producing many shapes of incense burners locally called ‘Majmar’.

As many as seven international firms have submitted final offers for a contract linked to the development of a major Bulk Liquid Terminal at the Port of Duqm. The project, centring on the establishment of bulk liquid terminaling and storage capacity at Duqm, is a key component of the infrastructure being developed by the Omani government to support the growth of a liquids hub as part of the logistics offerings of the Duqm Special Economic Zone (SEZ).
An extended deadline set by the Duqm SEZ Authority (SEZAD), which is overseeing the tendering of all contracts linked to the zone’s infrastructure development, expired at the end of last month. While the names of the seven bidders have not been disclosed, they are among nine international firms that were originally prequalified by SEZAD to compete for Phase 1 of the Duqm Bulk Liquid Terminal. The nine prequalified firms in question were: Boskalis Westminster Middle East Oman, Hyundai Engineering & Construction Co, Van Oord Oman; Dredging International, Tecnicas Reunidas, Consolidated Contractors Co, China Harbour Engineering Co, Huta Marine Works, and Penta Ocean Construction Co.
The successful bidder will secure a contract to execute Phase 1 of the project, covering dredging and reclamation works, and the construction of quay walls and berths, among other works.
Execution of topside infrastructure, which includes the construction of storage tanks, warehouses, pipeline corridors, loading arms, and so on, is covered in the Phase 2 package, bidders for which are currently being prequalified.
The Duqm Bulk Liquid Terminal will come up along the Northern Lee Breakwater of the port.

An agreement between Oman’s government and Chinese investors to develop a new US$10.7 billion industrial city near the port of Duqm will help Oman’s flagging construction sector, which is expected to this year post its slowest growth since 2000, according to BMI Research.

BMI said that projects such as the Sino-Oman Industrial City will help to underpin growth for construction in Oman, which it expects to accelerate from a growth rate of 2.4 per cent this year o 4.9 per cent by 2019.

    The firm said that inter­national investors, in particular from China, will fill a funding gap in Oman’s industrial sector that has been caused by the oil price plunge and the government’s inability to directly fin­ance work. Oman is expected to run an average fiscal deficit of 11 per cent of GDP over the next five years, according to BMI.

    "Although Oman possesses a degree of private investment in its construction sector, the state still plays a pre-eminent role in funding infrastructure projects, and as oil accounts for approximately 85 per cent of government revenue, the collapse in price has had a negative impact on its ability to finance projects," said David Lee, an infrastructure analyst covering Oman for BMI Research.

    As part of a major initiative to strengthen in-country value (ICV) while building mega projects, contractors handling $6.5 billion worth of Liwa Plastics Industries Complex project have agreed to purchasing a minimum of 25 per cent from local vendors, as well as meeting a minimum Omanisation level of 30 per cent, and providing training for Omani youths in excess of 15 per cent of those employed.

    The prestigious Liwa Plastics Industries Complex is being built by state-owned Oman Refineries and Petroleum Industries Company (Orpic).

    The estimated minimum value for ICV is approximately $1.5 billion, Dr. Hilal Al Hinai, general manager – Corporate Support Services – Orpic, told Times of Oman, prior to an in-country value roadshow in Sohar.

    Local small and medium enterprises are expected to significantly benefit from the business opportunities, which include sub-contracting work, purchase orders, and support services,to be purchased by major contracting firms.

    The board of Export Credit Guarantee Agency (ECGA Oman) approved OMR8 million worth credits including OMR4 million for local sales and OMR4 million for Omani non-oil exports.

    This was stated at the ECGA Oman’s seventh board meeting for 2016 at Airport Heights under the chair of Said bin Saleh Al Kiyoumi, chairman of Oman Chamber of Commerce and Industry (OCCI) and chairman of the agency.

    The board also approved minutes of the previous meeting and followed up the implementation of decisions. It also discussed several issues related to guaranteeing exports and the performance of the agency.

    The meeting was attended by Hamad Al Harthy, representative of the Oman Development Bank (ODB), Fayza Al Mashrafiyah, representative of the Ministry of Commerce and Industry and Idrees Al Hasani, representative of the Ministry of Finance.

    Oman’s conventional banks have achieved a robust 8.6 per cent year-on-year growth in credit disbursements, which stood at OMR19.4 billion by the end of June 2016.

    Of this, credit to the private sector grew by 9.8 per cent to reach OMR17.1 billion in the first half, according to banking and monetary review released by the Central Bank of Oman (CBO) on Wednesday.

    “Despite the challenges facing the economy, the banking sector remained resilient supporting economic diversification initiatives and credit needs,” the CBO report said.

    The total assets of conventional banks increased by 6.1 per cent to OMR29.1 billion by end-June 2016 from OMR27.4 billion for the same period a year ago.

    The CBO report said that the aggregate deposits held by conventional banks registered a modest fall of 1.6 per cent to OMR18.2 billion in June 2016 from OMR18.5 billion a year ago. “Government deposits with conventional banks declined by 10.5 percent to OMR4.8 billion,” said the CBO report.

    However, deposits of public enterprises increased by 4.2 per cent to OMR1.1 billion during the same period. Private sector deposits, which constituted 65.8 per cent of total deposits with conventional banks, increased by 2.1 per cent to OMR12 billion in June 2016 from OMR11.7 billion a year ago.

    The country’s inflation rate, calculated based on the change in the consumer price index (CPI), edged up by 1.1 per cent in May 2016, from the same month in 2015. However, the average growth in inflation for the first five months of 2016 ending May was lower at 0.6 per cent, compared with the same five-month period last year.

    The Sultanate’s government had deregulated prices of petroleum products in mid-January, resulting in a 38.3 per cent rise in the price of Super grade petrol to 166 baisas per litre in August (against 120 baisas before mid-January), a 36.8 per cent growth in regular grade petrol prices to 156 baisas per litre (against 114 baisas before mid-January), and a 21.9 per cent jump in diesel prices to 178 baisas (against 146 baisas prior to mid-January).

    Oman`s regular petrol (M90) production increased 175 per cent in the first half of the current year to reach 3.28 million barrels compared to 1.19 million barrels for the same period last year.

    However, super petrol (M95) output recorded a 21 per cent fall during the period, taking production to 8.95 million barrels as against previous year’s 11.38 million barrels, according to latest data issued by the National Centre for Statistics & Information (NCSI).

    Domestic sales of M90 petrol went up 265 per cent to 2.82 million barrels during the period, as against 772,000 barrels last year, while M95 petrol declined by 21 per cent to 8.88 million barrels from previous year’s 11.20 million barrels.

    Domestic sales of aviation fuel grew by 15 per cent to 2.17 million barrels, while diesel or gas oil fell by 8 per cent to 8.83 million barrels. LPG sales in the local market posted a 22 per cent rise to touch 1.08 million barrels during the period.

    CORPORATE NEWS

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    Octal, the world’s leading clear rigid packaging material supplier, said that it produces one million tonnes of polyethylene terephthalate (PET) resin and few other packaging materials per annum.

    Other packaging materials produced by Octal are DPET (new benchmark for packaging the world’s first green plastic sheet), Amorphous Polyethylene Terephalate (APET), Recycled Polyethylene Terephthalate (RPET) sheet and printed PET packages.

    From a single PET resin and sheet production plant in Salalah in 2006, the company has grown to a four plant operation in Oman, Saudi Arabia and the USA, with a workforce of more than 600 people. This has cemented the company’s international reputation as an export powerhouse of high quality, technologically advanced and environmentally friendly packaging materials with the lowest carbon footprint in 75 countries.

    Thailand’s largest oil and gas explorer, PTT Exploration and Production Pcl said yesterday it will sell its Oman 44 natural gas project to ARA Petroleum LLC in a shift in investments in the Middle Eastern country. PTTEP, the upstream flagship of state-controlled PTT Pcl, Thailand’s largest energy company, will sell its wholly-owned unit PTTEP Oman Co Ltd, which holds 100 per cent of the Oman 44 onshore project, to ARA Petroleum, the company said in a statement to the Stock Exchange of Thailand. The deal is expected to close in early fourth quarter of 2016.

    The Oman 44 Project is an onshore natural gas and condensate field located west of the capital Muscat with area of 1,162 sq km (449 sq miles). It has been in commercial production since 2007 with an average output of 19 million cubic feet per day of natural gas and 904 barrels per day of condensate in the second quarter of 2016. PTTEP gave no details about the value of the sale. In order to find other opportunities in the country, PTTEP also signed a memorandum of understanding with Oman Oil Company Exploration and Production LLC, a subsidiary of national oil firm Oman Oil Co, to seek “co-investment opportunities in areas of mutual interest” in Oman, it said.

    Mazoon Dairy Company, which plans to build a major dairy farm with a capital expenditure of OMR100 million to achieve self-sufficiency in dairy production in Oman, has started major initiatives to build the project in a large area in Buraimi.

    A tender for pre-qualifyinglocal companies to develop the farm, dairy plant and associated facilities at Sunaynah in Buraimi has already been floated. The pre-qualified companies can bid for the main contract to develop a new farm, factory, offices, accommodation and associated facilities – all coming up in a large area of 1,500 hectares.

    The proposed integrated joint venture dairy project plans to start with approximately 4,000 cows in 2017, which will grow to a herd size of 25,000 in 2026. The company will produce approximately 202 million litres in 2026, which will go up to 985 million litres in 2040. This, along with increase in existing production and the new milk collection scheme being promoted, will reduce the import dependency from 69 per cent in 2014 to 13 per cent in 2026.Apart from fresh milk, the dairy project is aimed at producing fresh juice, mineral water, laban and yogurt, according to earlier reports.

    Oman Investment Fund has contributed to the £75-million (around $98 million) raised recently by Cambridge Innovation Capital (CIC).

    A preferred investor for the University of Cambridge and a Cambridge-based investor in technology and healthcare companies, CIC was founded in 2013 as an initiative to create a local entity that would be able to provide growth capital to promising businesses arising from the university and the wider Cambridge Cluster, according to a company statement.

    CIC provides long term capital to support the sustained growth of investee companies. It is a preferred investor of the university and supports the commercialisation arm Cambridge Enterprise, including co-investment opportunities and access to pre-emption rights over companies arising out of the university.

    In addition, CIC has established an unrivalled position within the Cambridge Cluster.

    To date, it has committed approximately £33 million to 13 companies in
    the rapidly-growing technology and healthcare sectors.

    Oman Oil Company Exploration & Production is planning to build two refineries in Indonesia in collaboration with Jakarta-based Pertamina. According to Indonesia’s State-Owned Enterprises Minister Rini Soemarno, the Omani company has already conveyed its intention to invest in oil refineries in Bontang, East Kalimantan, and Kuala Tanjung, North Sumatra. “The company has conveyed its willingness to invest in Indonesia. We are arranging details of the location to enable fast construction,” the minister was quoted as saying by Antara. The minister said that Pertamina as the partner is conducting relevant studies to finalise the plan.
    “We are reviewing which refinery would be faster to build, Bontang or North Sumatra,” Rini said.
    According to Indonesian state-owned oil and gas company Pertamina president director Dwi Sutjipto, the investment details are currently being discussed by the two companies.
    “If the refineries have a capacity of 300,000 barrels a day, the projected investment is between US$10 billion and $12 billion,” he said.
    In the second half of last year, Indonesia’s energy and mineral resources minister Sudirman Said announced that a number of investors from Oman expressed interests in developing oil and gas tanks, a refinery and a petrochemical plant in the country.
    The current demand for gasoline in Southeast Asia’s largest economy hovers at about 1.5 million barrels per day.
    According to Rini, the two new refineries, once built, will increase the national production volume.
    “We are reviewing which refinery would be faster to build, Bontang or North Sumatra,” the minister said.
    Cooperation between Oman and Indonesia is expected to continue flourishing in the coming years.

    Initial groundwork has commenced on the site of the Sino-Oman Industrial City, an ambitious planned at an estimated cost of $10.7 billion at the Special Economic Zone (SEZ) in Duqm on the Sultanate’s Wusta coast. Chinese contractor Duqm Ningxia Construction Company is currently involved in the preparation of the sprawling site that will house a plethora of heavy, medium and light industries, as well as host substantial tourist, commercial and healthcare components. A team of officials from Duqm Ningxia Construction is currently based at the SEZ to help oversee the development of roads, office and residential facilities, as well as structures to house light industries and small and medium businesses.

    State-owned Public Authority for Electricity and Water (PAEW) is continuing with its project to privatise the Muscat Electricity Distribution Company (MEDC), it said in its annual report.

    “During 2015, PAEW approved the recommended strategic option for the MEDC privatisation process, which has been proposed by the study consultants and has obtained approval from the Ministry of Finance to proceed with the remaining stages of the study,” the annual report added.

    Like other privatisation programmes, the whole purpose of the proposed privatisation is to improve customer service and enhance efficiency of the company.

    PAEW also said that it represents the government in the follow-up team supervising development of the Gulf Cooperation Council’s (GCC) long-term water strategy with continuous coordination and involvement of key stakeholders.

    International oil and gas exploration and production firm Occidental Petroleum Corporation has credited rising hydrocarbon output from Block 62 in North Oman to an uptick in its international production during the second quarter of this year. A ramp-up in output from Block 62 — also known as Habiba Block — coupled with record production from its Al Hosn operations in Abu Dhabi (UAE), helped lift Oxy’s international production by 24,000 barrels of oil equivalent (BOE) per day in Q2 1016, the company’s President and Chief Executive Officer said.
    “Total company production for on-going operations increased to 609,000 BOE per day from 590,000 BOE per day in the first quarter. The increase was driven by record production in Abu Dhabi and Oman,” Vicki Hollub stated while announcing the company’s Q2 results over the weekend.

    State-owned Oman Oil Refineries and Petroleum Industries Company’s (Orpic) $9 billion worth of ongoing projects will make the company’s Sohar site one of the best integrated refining and petrochemical sites in the world.

    Among the three major ongoing projects, Sohar Refinery Improvement Project (SRIP) will overcome the constraints of Residue Fluidised Catalytic Cracking (RFCC) unit in the existing Sohar refinery and will enhance capacity by 70 per cent to meet the growing requirement of petroleum products in the country as well as supply additional volumes to aromatics and polypropylene plants, Musab Al Mahruqi, chief executive officer of Orpic, told ‘Times of Oman’.

    The project, with a capital expenditure of $2.7 billion, is scheduled for commissioning towards the end of 2016.

    “With SRIP, Sohar Refinery will add 82,000 barrels per day (bpd) to its existing capacity of 116,000bpd – taking the total capacity to 198,000bpd,” he said, adding. This indicates a 70 per cent growth in fuel production – 141 per cent for diesel, 34 percent for gasoline, 98 per cent for kerosene/jet fuel, 93 per cent for LPG, 159 percent for naphtha and 56 per cent for propylene,” he added.

    Oman’s total vehicle registrations edged up by 0.6 per cent to 52,674 in the first half of 2016, from 52,370 units for the same period in 2015.

    Although there has been reluctance on the part of the people to spend on high-value products like vehicles in view of recent slackness in oil prices, the marginal growth shows that the trend is gradually changing.

    There is also a growing preference for small cars this year, thanks to an increase in fuel price (after deregulation of petrol prices from mid-January), cost of vehicles and maintenance cost.

    “Even if people postpone purchase of cars, they can do it only for a limited period. At some stage, they have to go for a new car due to two reasons – an increase in maintenance cost and the vehicle becomes unreliable,” said Aftab Patel, chief executive officer of Al Omaniya Financial Services.

    “Therefore, when there is an economic slowdown, there is a fall in demand for one or two years. Thereafter, there will be a steady growth in demand for vehicles,” he added.