Duqm inks $ 4.6b loan deal
KUWAIT CITY, Dec 5, (KUNA): Director of soil reclamation at Kuwait Oil Company (KOC) Mansour Al-Khareji said on Wednesday value of compensation for losses incurred by the Iraqi invasion, only for treating the soil, is estimated at USD 2.4 billion. He mentioned in a press release, on sidelines of the inaugural session of the KOC-organized conference, themed “reclamation of the Kuwaiti soil,” that soil pollution is considered one of the biggest environmental disasters due to the remnants of Iraq’s invasion. Scope of the pollution is at 114 square kilometers on the surface and 26 million cubic meters, he said, declaring that the treatment of the contaminated soil would begin in the northern areas due to water sources’ availability there.
Al-Khareji said the reparation cost is about KD 20 million (USD 66 million) and it might increase to KD 50 million (USD 165 million), with expansion of the operation. The reclamation process would be completed in at least 10 years. The Iraqi occupation forces, before withdrawal, set ablaze to a chain of oil installations, causing formation of many oil lakes, thus contaminating large swaths of the Kuwaiti territories. The occupiers had left behind explosives and other materials that contaminated the soil and sand.
Meanwhile, Duqm Refinery, a joint venture between Oman Oil Company (OOC) and Kuwait Petroleum International (KPI also known as Q8), signed on Tuesday seven loan agreements worth USD 4.6 billion with local, regional and international financiers.
Under the deals, international financial institutions will pump USD 1.43 billion into the mega project located in southeast Al-Wosta Governorate, the Sultanate of Oman. Islamic banks will contribute USD 890 million, local Kuwaiti and Omani commercial banks – USD 490 million, the UK Export Finance Agency – USD 700 million, the Spanish export credit agency (CESCE) – USD 500 million, and the (South) Korea Trade Insurance Corporation (K-SURE) – USD 600 million.
Speaking at the signing ceremony, Q8 CEO and Chairman of Duqm Refinery Nabil Bourisli said today’s deal reflect the trust of international financiers in the Kuwaiti and Omani economies. “Both economies have been resilient enough to stand the test of time and address the numerous global economic challenges,” he said.
Bourisli lauded the steadily growing relationship between Kuwait and Oman, noting that the partnership in this refinery will open new horizons for cooperation in taping into the rich natural resources in both countries.
Furthermore, Deputy Chairman of Duqm Refinery Helal Al-Kharousi said the international financial institutions realize the strategic importance of this project, which will drive economic growth in the region. The strategic maritime location of the project gives it a competitive advantage being in the path of international shipping lines in the Indian Ocean and the Arabian Sea, thus easing the process of transport in and out of the Gulf region, he pointed out.
Khaled Al-Mushaileh, Q8 Vice-President for Business Development and Joint Ventures, said the Kuwaiti banks, aware of the economic importance of this project, contributed nearly 32 percent of the total funding for it.
The partnership between Q8 and OOC refl ect the special relationship between Kuwait and Oman and is in keeping with the strategy of Kuwait Petroleum Corporation (KPC) for 2040, he affirmed. Q8 was established in 1983 as the international downstream arm of KPC; it is recognized as one of the world’s top ten energy conglomerates.
On his part, Mubarak Al-No’mani, financial manager of Duqm Refinery, said the financing for the project included the largest Sharia-compliant funding in the Sultanate of Oman which will be offered by Islamic banks.
A total of 29 Islamic financial institutions from 13 countries are to cover 56 percent of the costs of the project under guarantees from three international trade credit agencies, Al-No’mani added. The list of financiers include the National Bank of Kuwait (NBK), Kuwait Finance House (KFH), the Commercial Bank of Kuwait, Ahli United Bank (Kuwait), Credit Agricole Corporate and Investment Bank, KfW IPEX-Bank, Societe Generale, Sumitomo Mitsui Trust Bank, Bank Muscat, Boubyan Bank, Warba Bank, Banco Santander, the Bank of Tokyo- Mitsubishi (MUFG), Bank Dhofar, Qatar National Bank, the National Bank of Oman, Bank Sohar, Ahli Bank (Oman), Standard Chartered PLC, HSBC Holdings, Korea Development Bank, Credit Suisse Bank, Intesa Sanpaolo (Italy) and UPI banka (Bosnia and Herzegovina).
Occupying an allocated 900 hectares (over 2,000 acres) of land, Duqm has a refining capacity of 230,000 bpd. It is designed to form the cornerstone of the Duqm Special Economic Zone, Oman’s next industrial center. The refinery has a 80 km long crude pipeline and an onshore export platform at Al-Duqm harbor.
It aims to produce light/middle distillates at a high efficiency rate. It focuses on naphtha, jet fuel, diesel and LPG as its primary products. The refinery comprises hydrocracking, hydro-treating and delayed coking units, along with sulphur recovery, hydrogen generation and merox treating units. Multinational construction and engineering companies were awards contracts to start developing the project in last June.