The long-awaited US$8.5 billion, 230,000 barrel per day (bpd) Duqm Refinery Project (DRP) and its ancillary tasks (costing an extra US$10 billion or so) was formally inaugurated on February 7, including to the already vital Increased appeal. The sultanate belongs to China and neighboring Iran. The Duqm venture goals to maximise returns from comparatively small oil and gasoline reserves (solely about 5 billion barrels of oil and about 24 trillion cubic ft of gasoline) by refining them to larger ranges. Oman envisioned this as an essential manner to take action. -Valuable petrochemical merchandise. The predominant downside confronted by the Sultanate with Duqm’s enormous endeavor is that constructing a petrochemical presence requires enormous upfront funding earlier than it may well generate income sooner or later, which leaves an enormous gap in its funds. was to stay. China has lengthy acknowledged Oman’s strategic significance far past its modest oil and gasoline assets and refinery plans, as detailed in my new e book on the brand new world oil market order. ing. So it was fast to capitalize on the truth that it already accounts for about 90 % of Oman’s oil exports by investing US$10 billion within the Duqm refinery venture, adopted by a number of different offers.
The Duqm refinery venture is definitely a worthwhile endeavor for Oman. The refinery a part of the venture will work in parallel with the Liwa Plastic Project (LPP) Industrial Park and the Sohar Refinery within the Duqm Special Economic Zone. The closing a part of Oman’s imaginative and prescient to construct an built-in refining and petrochemical enterprise in Oman is the 290-kilometer Muscat-Sohar Product Pipeline (MSPP) to move refined merchandise. The MSPP will join the Mina Al Fakhar and Sohar refineries to the Al Jifnain intermediate distribution and storage facility. China may also make some use of those services, however they’re of little general curiosity to the Chinese authorities. However, what may be very fascinating for China in some ways is the truth that Oman accomplished it utilizing Chinese funds. The funds should be repaid on a agency schedule and the Chinese authorities’s proper to confiscate them if unpaid, together with these of strategic significance, should be seized. land and sea) – China may have much more management over the sultanate than earlier than.
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Of vital significance to China is Oman’s geostrategic place, the place its lengthy shoreline alongside the Gulf of Oman and the Arabian Sea gives free and equal entry to western and japanese markets. China’s long-standing purpose of securing management over Oman is to shut all checkpoints on the important thing crude oil transport route from the Middle East to India, in accordance with senior sources working carefully with Iran’s oil ministry who spoke to OilPrice.com. It was stated that it was to take management. Europe avoiding the Cape of Good Hope route (dearer and harder to navigate) and the Strait of Hormuz route (extra politically delicate). This is absolutely per the Chinese authorities’s broader strategic goals, encapsulated within the Belt and Road Initiative (BRI) multi-generational energy seize venture. China already has efficient management over the Strait of Hormuz by means of the great Iran-China 25-year Comprehensive Cooperation Agreement. This is as revealed for the primary time on the planet in my September 3, 2019 article on this topic and analyzed in full. My new e book on the brand new world oil market order. The deal additionally offers China management of the Bab al-Mandab Strait, by means of which crude oil is transported upward by means of the Red Sea towards the Suez Canal, earlier than flowing into the Mediterranean after which west. This was achieved as a result of it’s positioned between Yemen (the place the Houthis have lengthy been backed by Iran) and Djibouti (China additionally controls Djibouti by means of comparable loans granted within the identify of Belt and Road). Ta.
The settlement was meant to permit utterly free motion of Iranian gasoline (and later oil) by means of Oman, which might circulation by means of the Gulf of Oman to the worldwide hydrocarbon market. This route was designed to permit the identical sanctions-free distribution that Iran operates by means of Iraq, as analyzed in my newest e book on world oil markets. However, given the potential sanctions-busting nature of the venture, the United States has introduced that this Iranian-Omani Including blocking LNG tasks. Before the Saudi-led blockade of Qatar erupted in 2017, the US provided Oman another: rising its gasoline consumption from Qatar. This was to be delivered by way of the Dolphin pipeline from Qatar to Oman by way of the UAE, or within the type of LNG, however Oman refused. Oman’s need to reinvigorate the Iran-Oman gasoline pipeline venture was additionally fueled on the time by the UAE’s calls for for more and more larger charges to permit gasoline to be transported from Iran by means of its waters. However, this was additionally a part of a technique to influence the United States. Oman takes gasoline from Qatar.
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