Oman's Ras Markaz Oil Storage Set to Receive First Cargo for Duqm Refinery in Nov
09.05.2022 By - NEWS

August 5, 2022 [SPGlobal] – Oman’s Ras Markaz oil storage terminal is set to receive the first cargo for the 230,000 b/d Duqm refinery in November amid talks with customers to store their crude in the project located some 1,000 km outside the Strait of Hormuz, the CEO of operator Oman Tank Terminal Co. told S&P Global Commodity Insights.


The Ras Markaz facility, located in the Special Economic Zone in Duqm, will have an initial capacity to store 5.2 million barrels of crude for the refinery, a joint venture between Oman’s state-owned energy company OQ and Kuwait Petroleum International called OQ8, Ard Van Hoof said in a recent interview.

“We are going to commission Ras Markaz crude facility by the end of this year but the operation itself is dependent or subject to the OQ8 refinery start-up,” said Van Hoof. “The crude source will be decided by the refinery.”

OQ expects Duqm refinery to start trial operations in the first quarter of 2023 after facing COVID 19-related construction delays, its CEO Talal Al-Awfi told state-run Oman News Agency on May 28.

Oman, the biggest Middle East oil producer outside OPEC, is developing Duqm overlooking the Arabian Sea into a shipping and energy hub that can rival UAE’s Fujairah, the world’s third largest bunkering hub that is boosting its crude storage with current capacity mostly catering to oil products.

Aramco agreement

However, Oman is banking on Ras Markaz’s location, land and facilities to help attract customers.

“Ras Markaz has sufficient land and will provide blending services to develop itself into a true regional crude oil hub,” Van Hoof said. “We can increase the number of SPMs as per the requirement from the market in the water in that sense the location of Ras Markaz provides numerous upsides to develop a crude oil facility in Oman next to Fujairah.”

Oman has already piqued the interest of Saudi Arabia, with Aramco Trading Co., a unit of the world’s biggest oil producing company, signing a memorandum of understanding with OQ in December 2021 to potentially store crude at Ras Markaz and supply feedstock to Duqm refinery. Aramco Trading Co. already has an office in Fujairah to handle gasoline and fuel oil storage and blending activities.

“The MOU between OQ and Aramco Trading Company expressed the intent to jointly assess the several opportunities, which include obviously storage of crude oil in in Ras Markaz,” said Van Hoof. “As the refinery, it is designed to receive and handle different types of crude grades. It depends on the crude slate the refinery wants to use and that could be Saudi crude.”

Additional tank capacity

OTTCO plans to have some 26 million of oil storage capacity at Ras Markaz in its first phase, but has its eyes on eventually storing some 200 million barrels. OTTCO is currently in talks with potential regional and international companies to store their crude at Ras Markaz, Van Hoof said.

“We are currently negotiating and discussing with different third parties who are interested in having a crude oil position in Ras Markaz,” he said. “We hope to be able to announce during the first half of next year a Final Investment Decision to develop and construct additional tank capacity.”

OTTCO is offering a flexible business model where the customer can be the sole owner of the tanks, partly owns the tanks through a Joint Venture with OTTCO or leases capacity from OTTCO. In all options, OTTCO will operate the assets.

Ras Markaz is focused purely on oil storage because of the coastline conditions at the facility, which has a longer draft than the nearby port of Duqm and will enable it to receive VLCCs/ ULCCs.

Omani oil exports

Ras Markaz will also be linked to Oman’s existing main oil pipeline currently operated by energy company PDO that connects fields from north to south, potentially allowing the country to export crude from the facility, Khalid al-Kalbani, business development manager at OTTCO told S&P Global. Currently Oman exports its crude from the Mina al-Fahel facility overlooking the Gulf of Oman.

“The idea behind this project basically is to enable the Ras Markaz terminal for all exports of the Omani Blend,” said Kalbani. “Definitely there will be also some domestic requirement for Omani crude. This might be kept the same or changed as per the ministry of energy’s decision and concerned parties.”

The capacity and timeline for completing the pipeline to Ras Markaz are yet to be determined, Kalbani said. However, the pipeline will help supply Duqm refinery with Omani crude because Ras Markaz will be connected to the refinery through an 80 km pipeline.

“Once we connect the Omani blend line, they [the refinery] will have the advantage of having the Oman crude oil available to them via pipeline rather than ships and it will be cost efficient as well for them to receive it via pipeline,” Kalbani said.

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