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CASE STUDY: Orpic’s Innovative US$6.4bn Project Finance Deal Bolsters Omani Petrochemicals Market

Oman Oil Refineries and Petroleum Industries Company’s (Orpic) US$6.4bn project financing deal was one of the largest of its kind to close in 2016 and will allow the company to develop Oman’s first polyethylene plant, fuelling the development of the country’s petrochemicals market.

May 25, 2016 // 3:40PM

Background

In January 2015 Orpic announced and tendered four EPC packages for the Liwa Plastics Industries Project (LPIC), a world-scale 1.1 mtpa HDPE, LLDPE and PP plant being developed by Oman Oil Refineries and Petroleum Industries Company (Orpic) to expand and improve the industrial area in Sohar, and develop the country’s petrochemical industry.

With a  total estimated cost of US$6.4bn, the project includes a natural gas extraction plant in Fahud; 300km of pipeline between Fahud and Sohar Industrial port area for gas transportation; a steam cracker unit; downstream plastics production units, and associated facilities.

Transaction Breakdown

LPIC is the biggest petrochemicals scheme and the country’s first mixed-feed steam cracker in the Sultanate’s history to date. Six export credit agencies (ECAs) and nineteen banks – three local, two Asian, ten European, two North American, and two regional – signed financing documentation worth $3.8bn for the LPIC in March 2016 less than a year after formal launch of the financing package in April 2015.

The deal is one of the largest project financings in the region to reach financial close in 2016, and the largest ever project financing in Oman.

“This was a significant transaction and represents the largest ever project financing in Oman,” said White & Case partner Mark Castillo-Bernaus. “It was a testament to all parties involved in achieving a successful major financing under challenging market conditions.”

“This is a transformational project for Orpic, establishing the company as a world-scale petrochemical producer. It is the largest ever Omani project financing,” said Stefan Budzinski, Head of Oil, Gas and Petrochemicals at Sumitomo Mitsui Banking Corporation. “Not only was it successfully closed in challenging circumstances within a highly ambitious accelerated timeline, it also succeeded in achieving the Company's key financing objectives including retaining full control of all product sales right from start-up, in itself a first for a Middle Eastern green-field petrochemical project financing.”

Middle East Projects & Infrastructure Deals

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