The Export-Import Bank of Korea (www.koreaexim.go.kr, Chairman Lee Duk-Hoon, “Korea Eximbank”) announced on April 11 that the bank will provide USD 600 million (a USD 420 million Direct Loan and a USD 180 million Guarantee) to finance an oil-refinery expansion project in Sohar, Oman, awarded to Daelim.

This project, developed by Oman’s state-run oil corporation ORPIC, is aimed at upgrading the existing oil-refining facilities in the Sohar industrial park and increasing the production capacity of petroleum products from 12 thousand barrels to 20 thousand barrels per day.

Daelim won the award for the USD 2.7 billion project by forming a consortium with UK’s Petrofac.

The Oman Oil Refineries and Petroleum Industries Company (ORPIC) was established in 2010 through the merger of Oman’s three petrochemical firms, ORPC, OPP, and AOL. It is 75% state-owned and 25% owned by the Oman Oil Company, and has monopoly over the supply of petroleum products in Oman.

The government of Oman is pursuing this project as part of its long-term development plan (termed “Programme Apple”) to lower its dependence on oil exports and vertically integrate the country’s petrochemical industry.

ORPIC invited tenders for the project on a ‘financing-first, award-later’ basis, with a view to attracting the participation of Korean ECAs.

Korea Eximbank promptly responded by issuing a Letter of Intent (L/I) to finance the project early in the EPC bidding process, decisively contributing to the awarding of the project to Daelim.

The solid network of cooperation Korea Eximbank has built in the region through its Middle East marketing tour and hosting of the annual MENA (Middle East and North Africa) Conference also helped to secure such an outcome.

Korea Eximbank’s successful financing of this project is raising the prospects for the participation of Korean companies in other large-scale projects being pursued by the Oman government, such as the LIWA Plastic Project (total project cost: USD 360 million).

This is the second time that the bank is providing large-scale financing to a petrochemical project in Oman.

In 2006, Korea Eximbank provided USD 500 million for the Aromatic Hydrocarbons Plant Construction Project in Oman awarded by Oman Oil Company to GS Engineering & Construction.

Other financiers taking part in the project will include one more Korean ECA (K-Sure, USD 182.5 million) and one Italian ECA (SACE, USD 100 million).