An agreement to create a joint venture company for developing a modern industrial gas production unit was signed here on Saturday.

Oman Refinery Company (ORC) has joined hands with industrial gases giant Air Liquide of France, among other investors, to create Air Liquide Sohar Industrial Gases LLC (Alsig) in which Omani business houses Mohsin Haider Darwish LLC and Omar Zawawi Establishment (Omzest) are also taking part.

Alsig is envisaged as a state-of-the-art unit with an initial capacity to manufacture 200 tonnes per day of nitrogen.

In later phases, the plant will be upgraded to produce oxygen and other industrial gases, depending upon demand by industries located within the Sohar Industrial Port complex.

Air Liquide, which has a majority 50.1 per cent stake in the Sohar venture, is a world leader in industrial and medical gases and related services.

Oman Refinery has 29.9 per cent of the equity in Air Liquide Sohar, while MHD and Omzest have a 10 per cent stake each.

Alsig has obtained a concession from Sohar Industrial Port Company (SIPC), which manages the port and industrial zone, to exclusively supply industrial gases to companies operating within the zone.

Oman Refinery is developing the $1 billion (Dh3.65 billion) refinery at Sohar jointly with the Omani Government, and is the main provider of feedstock and utilities to the new refinery.

At the signing ceremony, Oman Refinery also inked an agreement to lift the new plant's initial output of nitrogen, which is destined for the Sohar Refinery and associated Oman Polypropylene projects.

Further offtake agreements are also expected to be signed in the future as new industrial gas-dependent industries progressively come on stream at Sohar.

According to Wilfried Manet, General Manager of Air Liquide Sohar Industrial Gases, work on the facility will commence in the fourth quarter of this year.

The plant is expected to be operational by March 2006, with deliveries of nitrogen due to commence on April 1, 2006.

The gas will be supplied by pipeline to the consumers, he said, adding that a total investment of around $10 million (Dh36.7 million) is envisaged in the first phase.