12-02-2025
OQ8 celebrates LRT success and refining capacity boost
MUSCAT, FEB 12
The Duqm Refinery and Petrochemical Industries Company LLC (OQ8) – a 50:50 partnership of OQ Group of the Sultanate of Oman and Kuwait Petroleum International of Kuwait — in a significant achievement for Oman's energy sector, has successfully completed its Lender Reliability Test (LRT) just 10 months after mechanical completion, demonstrating the refinery's strong operational capabilities and financial stability. In celebration of its 1st year since inauguration, the refinery has also increased its production capacity to 255,000 barrels per day, solidifying its position as a competitive player in the global refining industry.
LRT COMPLETION UNLOCKS FINANCIAL STABILITY
In an exclusive interview with the Observer, David Bird, CEO of OQ8, highlighted the importance of the LRT in securing the financial independence of the company.
"For those unfamiliar, the company is project-financed, meaning the shareholders initially take on the financial risk," Bird explained. "A key part of this financing is the shareholder guarantee, which, for this company, amounts to over $4 billion—split equally between Oman and Kuwait, with each contributing over $2 billion. The LRT serves as a rigorous test that proves to lenders that the refinery is performing reliably, both operationally and financially, allowing them to release these guarantees."
The LRT process involved maintaining 90 days of flawless performance, covering technical aspects such as reliability, emissions, product quality, and safety, as well as financial operations like crude purchasing, revenue collection, and overall business execution.
"Lenders don't give up these guarantees easily," Bird noted. "They impose strict, onerous requirements, but we passed the test flawlessly on the first attempt, with zero waivers. This success means that our shareholders can now free up over $2 billion each to pursue new growth opportunities."
David Bird, CEO of OQ8
WORLD-CLASS PERFORMANCE IN RECORD TIME
OQ8's rapid progress has set it apart from other greenfield refineries globally. "To complete the LRT within the first year of operation is absolutely world-class," Bird stated. "Not just in the region, but globally. A company of this size and complexity, developed in an underdeveloped part of Oman, achieving full operational capacity and sustaining it for an entire year is extraordinary." However, Bird acknowledged that the journey was not without challenges.
"I often use the analogy of a duck on a pond," he said. "On the surface, everything appears calm, but beneath the water, the legs are kicking furiously. This achievement did not happen by accident—it's a testament to the incredible capability we've built within the organisation."
REFINING CAPACITY INCREASED TO 255,000 BARRELS PER DAY
A key part of OQ8's success has been its ability to optimise refinery capacity without major modifications. The company recently announced a 10% capacity increase, bringing production to 255,000 barrels per day.
"This was achieved purely through operational process optimisation," Bird explained. "There were no physical modifications. Instead, we carefully managed process conditions to maximise output while remaining within the design limits of the facility." This increased production capacity aligns with OQ8's broader commercial strategy, which prioritises high utilisation of its assets.
"In a capital-intensive industry like ours, once the investment is made, the focus shifts to maximising utilisation," Bird said. "It's no different from an airline ensuring full passenger loads or a hotel optimising room occupancy. For us, every additional barrel processed enhances value."
FUTURE GROWTH AND EXPANSION PLANS
Beyond capacity increases, OQ8 is also focused on long-term growth and efficiency improvements.
"We use a phased approach internally," Bird revealed. "The first stage was launching operations, the second is optimising performance, and the third will be expansion and growth. But we have to earn our right to grow. The shareholders have already invested $9 billion, and before they commit more, we must demonstrate that we are a responsible and capable operator."
FLEXIBILITY IN CRUDE SOURCING AND PRODUCT DISTRIBUTION
One of OQ8's defining advantages lies in its flexibility in sourcing feedstock and distributing products. Unlike many refineries that are constrained by a single crude source or a fixed domestic market, OQ8 can source crude via Ras Markaz oil terminal and intermediate feedstocks through the Port of Duqm.
"We're not tied to one crude type, and our products can go wherever market conditions dictate," Bird explained. "That gives us a unique competitive edge." Additionally, OQ8's strategic location outside the Strait of Hormuz and the Red Sea enhances its access to international markets. "Being directly on the Indian Ocean, close to major shipping lanes, allows us to target diverse markets," Bird said.
"Initially, we expected our products to be split between Singapore and Europe, but we've been pleasantly surprised by the demand from East Africa and India. That flexibility is a major strength."
SCALING UP EXPORT CAPABILITIES
The refinery has also demonstrated logistical prowess by successfully handling large-scale exports. "In just 12 months, we've already exported two cargoes of one million barrels of diesel each," Bird noted. "When you load at that scale, your freight costs drop significantly, making it viable to supply markets as far as North and South America, Europe, and beyond."
PROCESSING DIVERSE FEEDSTOCKS FOR MARKET ADVANTAGE
OQ8's ability to process diverse crude types has been another key factor in its success.
"We've already processed more than seven non-traditional feedstocks, including Basra Heavy and vacuum gas oil," Bird said. "Most refineries in the region are used to processing a single type of crude, but we've embraced flexibility, which allows us to capitalise on market opportunities."
As OQ8 continues to refine its operations and expand its market reach, the company remains committed to demonstrating its value to shareholders and positioning itself as a leader in the global refining industry.
