Octal Petrochemical, Oman

In February 2008 Octal Petrochemicals, established in 2006, announced that its new PET and APET sheet (polyethylene teephthalate and amorphous polyethylene terephthalate) manufacturing plant. The 'Sapphire' plant in the Salalah Free Zone was on schedule for completion in June 2008.

Construction began on the new plant, which will form the centre of the company's production, in late 2006. Prior to this there was already some production from the plant, accounting for sales of $10m per year. Octal was set up in Oman to establish a foothold in the lucrative plastic packaging market. Oman has the raw materials in great quantity and will now have a plant capable of producing quality material for the world market, particularly China and India where APET is in demand.

FINANCIAL

Octal Petrochemicals made a $300m investment in the integrated PET resin and APET sheet manufacturing plant based in Salalah in September 2006. Octal is the first company to build a plant in the free zone. Octal Petrochemicals expects total sales of its APET sheet packaging to reach $500m per annum by the end of 2008, around one fifth of the world market for APET.

Funding for the new plant has come from Oman-based investors and also some based in Saudi Arabia, Kuwait and the US. In November 2007 the Muscat Bank (financial advisor to the project) agreed to provide Octal with a $166.5m loan facility, which completed the company's initial $300m investment in proprietary technology and custom-made production lines.

Octal's parent company is Chemlink Capital Ltd, which provided the initial funding. Suhail Bahwan Group, BankMuscat, Muscat Overseas, Malatan Trading, DIDIC, Oman and Emirate Investment Company, Oman Investment Company, and National Investment Fund Company were Octal Petrochemicals founders. Total investments in the plant are set to rise to as much as $1bn upon completion with two more phases of expansion scheduled for 2009 and 2011. Tenders for the second phase of the project will be announced in September 2008.

NEW SAPPHIRE PLANT

The new 135,000m² plant will provide state-of-the-art facilities to take production from its current level of 30,000t/yr to over 330,000t when it opens in the middle of 2008. Octal hopes to effectively grab one fifth of the world APET market (worth $2.25bn) and also to become the largest PET producer in the Middle East.

The main plant had already seen much heavy equipment installed at the start of 2008 including: a 40m chimney and three 12MW heaters and also warehouses and raw material storage facilities. Fluor Corporation is the technology advisor to Octal and the project manager.

TANK FARM

In February 2008 Octal Petrochemicals announced that work is on track for the first phase of its $50m liquid chemicals terminal ('tank farm') in the Salalah free zone. The terminal in the Port of Salalah is being constructed to support the new PET and APET production plant.

The first phase will see two 5,000t stainless steel tanks for the storage of mono-ethylene glycol (MEG). This will probably be sourced from Saudi Basic Industries Corporation (SABIC). These feedstock chemicals will be pumped off the ships to the tanks and then piped 1,000m underground to the new processing plant.

The second phase, due to be completed by September 2009, will add a third 5,000t tank since there will be expansion of the processing facility.

The third phase is set for completion by 2011 and will increase the capacity by a further six tanks.

The tank farm terminal will be fully contained within a 10,600m² area at the port. Pipes and transport infrastructure will be completed by May 2008. Ultimately, three tanks will be for MEG and the other six for different chemicals.