GIC seals deal to purchase 20% interest in Oman Polypropylene LLC
Oman Oil Company S.A.O.C. (OOC) signed an agreement for the sale of a 20% interest in the US$ 313 million Oman Polypropylene LLC (OPP) to Gulf Investment Corporation (GIC), following the ‘in principle agreement’ reached between the companies in June 2004.
According to ONA, the agreement was signed on behalf of OOC by Maqbool Ali Sultan, Minister of Commerce and Industry and Chairman of OOC and Hisham Al Razzuqi, the Chief Executive Officer on behalf of GIC.
OPP is a joint venture between OOC and LG International of Korea with 80% and 20% stakes respectively. The share of GIC will be carved out from OOC’s 80% ownership in the Company and will entitle GIC for a seat on the Board of Directors of OPP.
Maqbool Ali Sultan, Minister of Commerce & Industry and OOC’s Chairman stated that the addition of GIC as an investor in OPP will further enhance the company’s shareholding. The Minister further said that GIC’s investment in OPP comes in line with Oman Oil Company investment guidelines and ambition by facilitating foreign investment in the Sultanate.
OPP was established to construct and operate a polypropylene plant in Sohar Industrial Area with a capacity to produce 340,000 tonnes per annum of polypropylene product. The project, which is started as part of Sohar refinery complex, aims to add value to the “propylene” stream to produce a product that can be used in a large array of downstream industries.
The plant is being constructed on EPC basis by a consortium of LG International Cooperation and LG Engineering & Construction Corporation. The plant is expected to directly employ 160 people at operation with tens of other jobs indirectly in activities outsourced to supporting contractors.
Oman Polypropylene will market production in the Indian subcontinent, Iran, Middle East and east and southern Africa and LG International will be the marketer in the rest of international markets.
Initially, 90 per cent of the production will be exported and the remaining 10 per cent will meet the existing domestic requirements. However, OPP hopes to encourage the domestic utilization in the downstream sector and to increase its allocation for the domestic use beyond the presently envisaged ratio of 10%. The plant will begin commercial production in the third quarter of 2006.
Oman Oil Company S.A.O.C. (OOC) is a commercial company 100 % owned by the Government of the Sultanate of Oman. The company was created in 1992 to give the Government another vehicle for pursuing investment opportunities in the energy sector both inside and outside Oman. Through participation in energy and energy related projects, OOC plays a role in the Sultanate's efforts to diversify the Omani economy and help generates Omani and foreign private sector investment. In Oman, OOC has interest in numerous projects that are either in operation, under construction or under development. These include gas transmission, petroleum retailing, refining, petrochemicals and aluminum smelting. Outside Oman, OOC has interests in exploration and production, crude oil pipelines and petroleum product logistics.
Gulf Investment Corporation Gulf Investment Corporation (GIC) was established in 1983 and is equally owned by six member states of the Gulf Cooperation Council (GCC): Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Its mission is to support regional cooperation and to stimulate private enterprise in the GCC region. With an authorized capital base of US$ 2.1 billion GIC’s balance sheet assets stood at US$ 6.6 billion at the end of 2003 and shareholders’ equity were US$ 1,285.9 million.