Oman-Kuwait OQ8 Spearheads Industrial Diversification in Duqm

OQ8, located in the Al Wusta, has been recognized as the largest investment project between the Sultanate of Oman and the State of Kuwait. This monumental project is a collaborative effort between OQ Group – a global integrated energy conglomerate – and Kuwait Petroleum International, marking it as one of the standout industrial ventures within the Special Economic Zone at Duqm (SEZAD) and a major stimulus for refinery-based projects.

The refinery, with an investment cost of approximately US$9 billion, has established itself as a key player in the global energy market, setting benchmarks with its provision of high-quality energy solutions that fuel the growth and development of both industrial sectors and daily energy consumption. As one of the most advanced and expansive refineries in the Middle East and North Africa, OQ8 relies on imported crude oil in its operations, setting it on a strategic path to be recognized as a world class refining entity.

Its commitment to supplying superior petroleum products worldwide will significantly boost Oman’s refining output, elevating its capacity to over 500,000 barrels per day.

Mulham Basheer al Jarf, Deputy President for Investment at Oman Investment Authority – Chairman of OQ Group Board of Directors stated that OQ8 is a testament to Oman’s commitment to fostering strategic partnerships, particularly with fellow GCC nations. This collaboration with Kuwait exemplifies large-scale ventures located in Duqm, a prime site adjacent to international maritime pathways.

Jarf further noted that OQ8’s objective is to optimize natural resources and significantly enhance the value of crude oil. Constructed to meet the highest international standards and equipped with state-of-the-art technology, the project is a cornerstone of OQ Group’s strategy aimed at enriching the Omani economy through diversified investments. Moreover, OQ8’s synergy with nearby strategic projects establishes it as a pivotal industrial center, facilitating the growth of petrochemical and downstream industries within the region.

From his side, Ashraf bin Hamad al Mamari, Acting CEO of OQ Group, said: “OQ8 marks a pinnacle of achievement for the Omani-Kuwaiti alliance. This collaboration not only merges our economic interests but also celebrates the profound connection and shared legacy that Oman and Kuwait hold”.

He highlighted that the project’s success unlocks further opportunities for future cooperation among GCC countries in developmental and economic initiatives, bolstering the stability of global energy supplies. Mamari emphasized that OQ8 and similar initiatives are ideally positioned to provide unique safety guarantees, capitalizing on Oman’s strategic location to provide streamlined crude storage and global export services.

SEZAD plays a crucial role in developing trustworthy state-of-the-art infrastructure, thereby attracting local and foreign investments through an investment-friendly legislative environment and exclusive investment incentives.

OQ8 is seamlessly integrated with a number of OQ Group investment projects, including OQ Gas Networks (OQGN), Oman Tank Terminal Company (OTTCO), Marafiq and OQ Trading (OQT). The Ras Markaz Crude Oil Terminal, expertly managed by OTTCO, is a shining example of this integration, as OTTCO provides crude storage tanks from which crude is transported to the refinery via pipelines extending over 80km.

Marafiq, on the other hand, delivers vital services such as electricity, water, and sewage treatment to support OQ8 and several other projects, enabling the operations of various industries, including petrochemicals, manufacturing, and heavy industries, contributing to the development of manufacturing infrastructure.

Additionally, OQ Group’s extensive 221km long gas pipeline, stretching from Fahud to SEZAD, is strategically designed to cater to both the present and future gas supply requirements of the region.

Hilal al Kharusi, CEO of Commercial and Downstream at OQ Group and Chairman of OQ8, underscored the refinery’s strategic significance in achieving the goals outlined in Oman Vision 2040, signifying a critical juncture for the advancement and enhancement of Oman’s energy sector. The refinery elevates SEZAD to a crucial hub for economic and industrial initiatives, driving towards economic diversification, enticing investments, and bolstering infrastructure through the provision of comprehensive facilities and services.

He elaborated that OQ8, ranking among the largest and most advanced refineries in the Middle East and North Africa, processes 230,000 barrels of crude oil daily to produce essential products such as diesel, jet fuel, naphtha, and liquefied petroleum gas.

Kharusi emphasized the refinery’s strategic position at the nexus of the Indian Ocean and the Arabian Sea, highlighting its potential to spearhead joint economic ventures among GCC countries, thereby fortifying economic connections.

Kharusi also highlighted the refinery’s commitment to In-Country Value (ICV), aligning with governmental objectives to bolster the local market. The refinery has invested approximately US$2.4 billion in contracts with local suppliers, which includes US$1.7 billion towards local services, US$534 million to support small and medium-sized enterprises (SMEs), and US$182 million in the procurement of products manufactured in Oman.

He noted that these remarkable milestones are a testament to the rigorous controls implemented by the Board of Directors and Executive Management. These controls mandated that contractors allocate no less than 20% of expenditures towards goods and services sourced domestically, with an additional 10% dedicated to supporting SMEs.

The nationalization rate at OQ8 stands at an impressive 60%. Currently, 749 employees from 32 nationalities contribute to the refinery’s success, embodying values of diversity, inclusion, and the exchange of experiences. This diverse workforce is instrumental in cultivating an effective institutional culture focused on excellence.

Since 2018, OQ8 has allocated 114 local educational scholarships and 10 international scholarships, totaling 190 scholarships. These initiatives include specialized training programs tailored for graduates of higher diplomas in technical specializations, ensuring a skilled workforce capable of meeting evolving industry demands.

OQ8’s steadfast efforts in this regard have resulted in remarkable success, with over 90% of program participants securing direct job opportunities within the OQ Group, OQ8, and affiliated contracting firms. Furthermore, the refinery has facilitated over 500 training opportunities, supporting employment in various construction companies. Since 2014, over 500,000 individuals have directly benefited from OQ8’s social investment programs, with 110 scholarships and projects contributing to their professional and educational development.

Kharusi also noted that OQ8 placed paramount importance on social investment, allocating approximately US$5.4 million towards initiatives spanning education, healthcare, economic growth, and environmental stewardship. In 2023 alone, OQ8 spearheaded 27 impactful projects and sponsorship programs.

Shafi Taleb al Ajmi, CEO of Kuwait Petroleum International (Q8) and Vice-Chairman of the OQ8 Board of Directors, highlighted that “The establishment of OQ8 in the Sultanate of Oman serves as a monumental milestone in the evolving economic relations between Oman and Kuwait and reflects the robust support and attention that both governments have afforded to the refinery.”

Ajmi affirmed that OQ8 cements the countries’ roles in the international energy landscape by pooling resources and expertise to foster technological progress and enable infrastructure enhancement, thereby stimulating innovation in renewable energy and other sectors. He highlighted that this initiative acts as a cohesive force in energy production and distribution, amplifying the collaboration’s influence on global energy dialogues and policymaking.

Ajmi noted that OQ8 significantly boosts Oman and Kuwait’s efficacy in the energy sector, notably enhancing the trade flow between East and West. It opens new markets in Asia and Africa, where there is a consistently rising demand for energy. This collaboration further acts as a catalyst for increased regional cooperation in the GCC, setting a precedent for similar initiatives among neighboring countries, thus contributing to greater economic stability and inclusive growth across the Middle East.

Ajmi characterized the investment venture in OQ8, in partnership with OQ as a trailblazing endeavor which played a pivotal role in founding this vast industrial edifice. He expressed his profound pride in the achievements of the project’s workforce, lauding their exceptional dedication and resilience in navigating and surmounting the myriad challenges and hurdles encountered during the ambitious project’s execution.

He emphasized OQ8’s strategic importance given its proximity to the Arabian Sea and the Indian Ocean. This prime location positions it as a crucial gateway to international markets and maritime routes. He reported the reception of 18 crude oil shipments by January 2024, including 9 from Al Ahmadi Port and 9 through OQT, a subsidiary of the OQ Group, emphasizing OQ8’s vital role in bolstering the global energy supply chain.

Al Ajmi added that the refinery produces a wide array of products for diverse applications, including transportation, aviation, cooking gas, iron production, and raw materials for chemical products such as cleaning agents, plastics, medical materials, and asphalt. Highlighting the refinery’s standing as a major contributor in the global market, he revealed that 73 shipments have been exported to the Middle East and international markets since the commencement of operations and up until the end of January 2024.

OQ8 has also undertaken proactive measures in the realm of environmental conservation, grounded in a holistic framework of innovative strategies and initiatives aimed at reinforcing its status as an environmentally responsibility organization within the industrial sector. These measures encompass the adoption of advanced waste management systems, utilization of advanced emissions control technologies, and the implementation of processes geared towards enhancing energy efficiency.

Finally, health, safety, security, and environmental (HSSE) policies are the foundation of all operations at OQ8. The company devised and implemented a tailored HSSE policy which undergoes continuous revision to ensure alignment with the latest requirements and global best practices. Furthermore, OQ8 prides itself on a culture rooted in the core values of teamwork, respect, integrity, and professionalism, reflected in achieving more than 6.8 million injury-free hours in 2023, which also showcases the company’s unwavering commitment to guaranteeing a safe and healthy work environment.