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SMC to Explore Potential for Downstream Projects
Source: Oman Observer 9/4/2017, Location: Middle East
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The wholly government-owned Salalah Methanol Company (SMC), which signed agreements last month for the addition of an ammonia plant to its world-scale methanol scheme in Dhofar Governorate, says it will weigh opportunities for developing projects further downstream of its current investments in the Salalah Free Zone.

Among the options that hold particular promise are investments in fertiliser and urea projects utilizing part of the liquid ammonia output set to begin flowing from the expanded Salalah Methanol scheme by late 2020, a high level official said.

Downstream value addition that harnesses the ammonia output of the expanded project is an integral part of SMC’s long-term objectives, said Awadh al Shanfari, Chief Executive Officer.

“This is actually our dream; As part of our planning for the future, we hope to see further downstream activities, perhaps in fertiliser production. We hope one day we have enough feedstock of gas to see either urea, DAP (diammonium phosphate) or other fertiliser in production.”

The official was speaking to the Observer soon after participating in ceremonies marking the financial close for the Salalah ammonia project on August 28. SMC, a wholly-owned subsidiary of Oman Oil Company’s Takamul vertical, successfully secured a 12-year $728 million recourse project finance facility from a mix of international, regional and local financial institutions. The facility will be used to refinance SMC’s existing debt, while the remaining $443 million to be allocated to the development of the ammonia plant.

Underscoring the competitiveness of the ammonia project, hydrogen-rich purge gas which is a byproduct of SMC’s methanol production, will be combined with nitrogen gas from the atmosphere to produce ammonia. Plant capacity is sized at around 1,000 metric tonnes per day of anhydrous liquid ammonia, which is presently destined for export under an offtake agreement concluded with Oman Trading International (OTI), a subsidiary of Oman Oil Company.

Besides being used as an ingredient in the production of fertilizers, ammonia is also an important intermediate chemical in the manufacture of synthetic resins (urea based), synthetic fibres (acrylics and nylons, and polyurethanes, among other applications. According to Al Shanfari, international engineering and construction giant SNC-Lavalin is currently mobilising ahead of the start of its contract to execute the ammonia project on an Engineering, Procurement and Construction (EPC) basis later this year.

“We are now in the detailed engineering stage, and we hope to break ground on the project in November,” the CEO said. Commenting on the employment generation potential of the project, Al Shanfari said the new investment will help create around 50 direct jobs, while contribute to a multi-fold increase in indirect jobs.

Asked about the potential for biofuel production based on SMC’s product streams, the CEO added: “We are not thinking about it in Oman at the present moment, but we hope it will cross our minds in the future.”


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 



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