Oman’s OQBI sees potential for expansion into clean fuels

MUSCAT, NOV 5

OQ Base Industries (OQBI), the Omani state-owned integrated producer of methanol, ammonia and LPG products, has outlined the potential for a significant expansion of its methanol plant’s capacity in the Salalah Free Zone in the south of the Sultanate of Oman. Additionally, it envisions options to capitalise on blue and green ammonia production opportunities to support, among other areas, the decarbonisation of the global maritime industry.

OQBI, wholly owned by OQ Group – the integrated global energy group of Oman – announced earlier this week that it intends to offer 49 per cent of its shares for public investment via an Initial Public Offering (IPO) on the Muscat Stock Exchange (MSX).

According to OQBI, there are significant opportunities for capacity expansions and inroads into the low-carbon clean fuels sector, as well as the green energy value chain. Foremost among these is the potential for a brownfield expansion of its existing 1,095 ktpa capacity methanol plant by around 550 ktpa—a move that will also increase demand for lean natural gas due to LPG production at the integrated complex.

OQBI also sees prospects in the transition to clean methanol and ammonia to meet the emerging demand for clean fuels. “Management believes that as a unique integrated petrochemical player of scale in the region, with secured feedstock supply at competitive pricing and locational advantage, the company is well positioned to benefit from a potential industry shift towards blue methanol and blue ammonia in the medium term, subject to feasibility and market development, as well as a potential further shift towards green ammonia in the long term, subject to the availability of green hydrogen locally and the development of global markets and competitive terms,” it noted.

OQBI cited expert projections of an upsurge in global clean ammonia demand, which is expected to soar to over 200 million metric tonnes by 2040, with the marine fuels segment accounting for the lion’s share at around 170 million metric tonnes. Similar demand trends are also foreseen for green methanol, which, along with green ammonia, is set to support the decarbonisation of the global shipping industry.

Significantly, carbon capture — envisioned as part of its Decarbonisation Plan—will also bolster OQBI’s future forays into the sustainable fuels ecosystem. “The company has developed a Decarbonisation Plan targeting Net-Zero emissions by 2050, in line with Oman Vision 2040. In the long term, the company is considering the adoption of carbon capture technology in the methanol reformer and the introduction of carbon credit certificates, which could allow ammonia to be classified as blue or green ammonia in certain markets, leading to potential pricing advantages,” it added.

OQBI boasts a combined nameplate production capacity of 1,816 ktpa across its methanol, ammonia and LPG production plants in the Salalah Free Zone. The integrated complex processes rich and lean natural gas feedstock supplied under long-term agreements with Integrated Gas Company (IGC).