Omifco Fertiliser Complex, Sur Industrial Estate, Oman

Oman India Fertiliser Company (Omifco), an India-Oman joint venture company, is investing $969 million to build 1.65 million t/yr of urea and 250,000 t/yr of surplus ammonia capacity. The facilities will be located at the Sur Industrial Estate, 150km south of Muscat, Oman. The foundation stone-laying ceremony took place on 1 October 2003.

It is claimed that the facility will be the world's largest grassroots fertiliser complex. Completion of the complex is slated for April 2005. Output will be exported to India.

FINANCING THE OMIFCO PROJECT

Shareholders in Omifco are Oman Oil Company, 50%, Krishak Bharati Cooperative Limited (Kribhco), 25%, and Indian Farmers Fertilisers Cooperative (IFFCO), 25%. The plant will be operated and maintained by Omifco.

The funding requirements have been met with $321 million of equity and $649 million of debt. The projects financing has also been supplemented by Italian and French credit export agencies. The lenders are BNP Paribas, ANZ Investment Bank and Arab Banking Corporation.

CONSTRUCTION OF THE PRODUCTION COMPLEX

In the first half of 2002 a 50:50 joint venture between Italy's Snamprogetti and France's Technip-Coflexip was awarded a lump sum turnkey contract for the design and construction of the ammonia and urea production complex. Urea granulation units, associated utilities, offsites and marine works will also be built. The contract became effective in July 2002.

A major part of the construction has been subcontracted to Consolidated Contractors International.

Under the terms of the contract, which is valued at $770 million, Snamprogetti and Technip-Coflexip are also supplying equipment and materials, construction management and start-up supervision. The two companies will also train Omifco personnel.

TECHNOLOGY

The ammonia output will be based on Haldor Topsoe technology. The urea units will use Snamprogetti technology.

SUPPLY OF EQUIPMENT

At the beginning of 2003, engineering, procurement and construction conglomerate Larson & Toubro Limited (L&T) announced that it had been awarded a $32.5 million contract to supply equipment for the Omifco production complex. The contract was awarded by the Snamprogetti, Technip-Coflexip joint venture.

CRITICAL EQUIPMENT

Under the terms of the contract L&T's Heavy Engineering Division will be responsible for the design, fabrication and supply of all critical equipment such as ammonia converters, reformed gas waste heat boiler systems, secondary reformers, ammonia separators and CO2 absorbers and regenerators. The division will also supply high-pressure heat exchangers for the two ammonia plants as well as two urea reactors.

REFORMER PACKAGES

L&T's Engineering and Construction division is undertaking mechanical design, detailed engineering, manufacturing, supply and testing of two steam reforming furnace packages. This includes the convection modules, pressure parts, etc. The equipment is due to be delivered by the end of 2003.

SHOP FABRICATED EQUIPMENT

Vijay Tanks and Vessels (VTV) is supplying CS/SS shop fabricated equipment for the Omifco project.

PROCESS AUTOMATION

At the beginning of 2003 the joint venture between Snamprogetti and Technip-Coflexip awarded Yokogawa Blue Star Limited (YBL), a process automation company, a contract. Said to be valued at $3.85 million, the contract covers the supply of distributed control and emergency shutdown systems as well as related equipment to the Omifco project.

OFFTAKE AGREEMENTS

A urea off-take agreement was established between the Government of India and Omifco. At the same time an ammonia off-take agreement was set up between Omifco and Indian Farmers Fertilisers Cooperative (IFFCO). India's Government believes that the urea off take agreement will provide the country with a reliable and long term source of urea.

SUPPLY OF FEEDSTOCK

A gas supply agreement was established between the Government of the Sultanate of Oman and Omifco. Under the terms of the agreement the Government of Oman will supply gas to the project for 15 years at a fixed price for the first ten years and then at a pre-agreed escalation for the remaining years. The gas will be sourced from the Oman LNG plant located in Sur, Oman.

BACKGROUND

The Oman India fertiliser project has been on the cards since 1994 when a memorandum of understanding was signed between the governments of India and Oman. But despite the desire of both to move the project forward, finding a bankable offtake agreement was difficult. While the Oman Oil Company is well known, the Indian Farm Fertilisers Cooperative and Krishak Bharati Cooperative are less familiar. Lenders gained confidence in the project based on the fact that once completed the complex will be one of the lowest cost production sites in the world. Initial mandate took place in 1998 and the financial deal was finally closed in 2002, at a time when there were heightened perceptions of risk across the Middle East.