Oman Refineries and Petroleum Industries Company (Orpic) and a consortium of 21 local and international banks and ECAs have signed a US$2.8bn loan agreement to finance the expansion of the Omani state-owned Sohar refinery.

The Sohar Refinery Improvement Project (SRIP) will be 65% debt financed. The consortium of financiers includes HSBC, Standard Chartered Bank and SMBC, with part-guarantees provided by the Korean ECAs (Kexim and Ksure) and the Italian ECA Sace.

Commenting on the consortium’s agreement to finance the project, Orpic’s chief financial officer Nazar al Lawati says: “The financing is one of the largest in Oman with a unique finance structure that will support the attainment of several of Orpic’s finance strategy objectives. The ECAs and other lenders have demonstrated their commitment to and confidence in Orpic’s growth strategy.”

“Attracting a consortium of eminent international financial institutions to sponsor the Sohar refinery improvement project reflects the viability of the Omani market and Orpic’s credible and strong position in the regional and international markets,” adds al Lawati.

SRIP will increase the production capacity of the refinery by 70%, making it one of the most efficient in the region. The plant supplies gasoline, diesel, fuel oil, LPG and other hydrocarbons, mostly to the Omani market, and supplies propylene and naptha to two petrochemical companies controlled by Orpic.

Sace has guaranteed an US$100mn loan, issued by HSBC, to finance an engineering, procurement and construction contract Orpic holds with several Italian companies for the supply of equipment and machinery to SRIP. According to the latest Sace export report, Italian sales to the Middle East will grow 9% on average over the next four years.

The other members of the consortium include KfW Ipex Bank, Abu Dhabi Commercial Bank, Qatar National Bank, the Saudi National Commercial Bank, National Bank of Abu Dhabi, Arab Banking Corporation, Arab Petroleum Investment Corporation, Ahli United Bank and Arab Bank.

A number of local banks complete the consortium, including Bank Muscat, National Bank of Oman, Al Ahli Bank, Bank Dhofar, Bank Sohar and Oman Arab Bank.