Work on Sohar fertiliser plant begins next year

The $600 million Sohar International Urea and Chemical Industries (SIUCI) - promoted by Sheikh Suhail Salem Bahwan - has appointed Uhde GmbH as the preferred bidder for the construction of the 2,000 mtpd ammonia and 3,500 mtpd granular urea complex at Sohar after an extensive selection process.

Work on the project is expected to start in the first half of next year with a 35-month completion schedule. It will be one of the largest private sector green field fertiliser projects in the world.

The total cost of over $600 million makes this the largest industrial investment by an individual in any GCC country and reflects the commitment of Sheikh Suhail Bahwan towards industrialisation and the involvement of the private sector in the growth of Oman's economy.

The appointment of Uhde marks the key milestone in the development of the project. SIUCI earlier appointed Transammonia Inc., the largest marketer of ammonia/urea in the world as the offtaker based on a long term take-or-pay agreement.

Uhde GmbH is a leading fertiliser technology and contracting company and part of the ThyssenKrupp Group, one of the biggest industrial groups in Germany with 193,000 employees and annual sales of 37 billion euros.

Five contractors were pre-qualified for the project including Kellogg Brown Root of the U.S., Snamprogetti of Italy, Uhde GmbH of Germany, Mitsubishi Heavy Industries and Toyo Engineering Corp of Japan.

From these, three bids were received by last December, from Uhde, Toyo and a consortium of Snamprogetti and Mitsubishi.

The bids were scrutinised by a specialised project team having over 250 man years of experience in setting up and managing ammonia/urea projects supported by James Chemical Engineering of the U.S., Technical Consultants; HSBC Investment Bank Plc of the UK, financial advisor; Denton Wilde Sapte of the UK, legal advisor; AON Middle East, insurance advisor and WS Atkins, environmental advisors to the project.

Several rounds of detailed discussions were held in Muscat with technical and commercial representatives of the bidders and all three bids were technically and commercially aligned.

The bidders were then asked to submit final prices inSeptember. Based on the prices received, a target price was set by the company.

Two of the three bidders accepted the target price. Of these, Uhde was selected because of its high degree of compliance with SIUCI requirements.