Expanding Oman’s Petroleum Value Chain


Oman has all the resources for a booming petrochemicals sector, and new policies and endeavors are intended to fire up the industry.

While maintaining the effort to diversify its economy, Oman still has an important role to play in the petroleum derivatives sector, with new innovations and projects putting the Sultanate in a desirable position to use its most precious resource to take advantage of the growing market for plastics. In a country with a wealth of engineers and advanced technical knowledge, the petrochemical industry is soon to be another success story for Oman.

Following a major increase in production capacity of petrochemicals throughout the region, Oman is ahead of a global trend that has seen the oil industry expand its product capabilities. Nations that once relied on exporting crude oil are now turning their attention toward attracting investments to develop local refineries, with hopes of boosting domestic petrochemical manufacturing and increasing exports. There is a constant demand for petrochemical products in the world market, ensuring a steady source of buyers for the increased levels of production Oman is working to attain.

Sailing through a storm, the Omani oil industry is hoping to benefit from a tailwind spurred by the Liwa Plastic Industries Complex (LPIC) project, which will play a key role in guiding the manufacturing sector toward Oman’s 2020 vision. Named a priority area in the country’s ninth Five Year Plan, the manufacturing sector is expected to contribute 15% to the national GDP, while the manufacturing of petrochemicals at the LPIC is expected to contribute 2-3% of that total just by itself.

With the largest-ever project financing transaction to be made in the Sultanate, Oil Refineries and Petroleum Industries Co. (Orpic) closed a USD3.8 billion project financing facility for its USD6.5 billion project, supported by various export credit agencies from Italy, the Netherlands, South Korea, the UK, and Germany, alongside 19 other international and domestic commercial lenders. The significance of this is development is paramount, as the LPIC will enable Oman to produce polyethylene for the first time ever. Polyethylene receives the most global demand, representing 40% of total plastic applications worldwide. The LPIC is on schedule for completion during 2019 with an expected production of 1.4 million tons of polyethylene and polypropylene (a 1 million-ton increase) and has the intention of deepening access to existing markets around the world and penetrating new markets.

The broad application of petrochemical products is capable of helping the economic and industrial output of Oman overall because these raw materials can be moved upstream and turned into higher-cost consumer goods. From the feedstock, a company can make a petrochemical product and, in turn, the product can be used to create packaging and then be applied to a good. In the end, these petrochemical products can go into products such as electronics, cosmetics, and agricultural tools, all of which are high-value products that started from simple feedstock. Thus, the petrochemical industry effectively adds value through the chain of production.

In order to realize its full potential, Oman will have to manage its other natural resources carefully, especially in the case of its water reservoirs, as large volumes of water are used for cooling, steam production, processing, and various other uses. In this regard, apart from complying with current environmental regulations, technological innovations in water conservation and wastewater usage techniques will need to match the existing petrochemical hi-tech developments in place.

With some countries just starting to refocus their economies by developing the petrochemical industry, Oman is in a good position to take advantage of this trend and benefit from the size and technology available at the LPIC project in Sohar, which will encompass a refinery, aromatics plant, steam cracker, and the downstream polypropylene and polyethylene plants, each of which provides Oman with one of the best integrated refinery and petrochemical facility combinations in the world. This will effectively position Oman’s petrochemical sector in the center of its diversification efforts.

You may also be interested in...


Energy & Mining

Quick off the block

Oman as a global green hydrogen hub

View More


Omani Investment Law

What is Oman like for investors in 2022?

View More


Rewriting the Future

Oman Vision 2040 and the 10th Five-Year Development Plan (2021-2025)

View More


Close to Home

Staycation and quarantine packages

View More


Dynamic Development

Advantages of Free Zones

View More
View All Articles