HSBC scoops Orpic’s nancial advisory services mandate

MUSCAT — International lender HSBC, along with National Bank of Oman (NBO), are understood to have jointly won a mandate to provide nancial advisory services to Oman Oil Re neries & Petroleum Industries Company (Orpic) linked to the expansion of its Sohar Re nery, as well as the re nancing of its existing debt.

HSBC is known to have been selected from amongst a shortlist of four international banks that bid for the prestigious contract.

The partnership of HSBC and NBO will advise stateowned Orpic on the nancing of the expansion of its agship re nery at Sohar, estimated to cost in the range of $1 billion-$1.5 billion. This gure could potentially rise to around $3 billion if Orpic also decides to re nance the existing debt-estimated collectively at $2 billion — of all three project companies that currently come under its umbrella.

“As nancial

adviser, HSBC’s primary brief is to advise Orpic about the prevailing scal environment, the structure of the facility, the type of lenders that can be approached, and so on,” a banker familiar with the bid told the Observer.

“The appetite of lenders and the strength of their enthusiasm to lend to a government entity like Orpic will be critical to any decision by the latter either to limit its requirements to the nancing of the re nery expansion, or to go in for debt re nancing as well,” he further explained.

Orpic was created by the successful integration of three well-established re nery and petrochemicals companies, namely, Oman Re neries and Petrochemicals Company LLC (ORPC) which owns the re neries at Mina al Fahal and Sohar, Aromatics Oman LLC (AOL) and Oman Polypropylene (OPP).

Based on the recommendations of its advisors, Orpic may decide to either appoint a lead arranger (in all likelihood HSBC itself) or ap- proach lenders directly the required nance.

Signi cantly, with the successful conclusion of the competitive process for - nancial advisory services, attention will now be focused on the selection of an Engineering- Procurement- Construction (EPC) contractor for the implementation of the Sohar Re nery expansion.

Around eight international contractors are seeking to be prequali ed to bid for the EPC package, which will account for the lion’s share of the estimated $1.5 billion -$1.8 billion project cost. A shortlist of bidders is expected to be announced shortly.

The expansion will add around 60,000 barrels per day (bpd) of new capacity to Sohar Re nery’s present processing capacity of around 116,000 bpd of crude and long residue. This represents a hefty 70 per cent jump in the plant’s existing processing capacity.

Work on the expansion project will only start next year and is slated for completion in the rst half of 2016.

for