- Lenders Bank Muscat and Bank Dhofar recognised for their support
- Second plant to start production in October
Oman-based Octal Petrochemicals [www.octal.com] celebrated two years of operations today at a press conference held to recognise the support of Octal’s principal lenders.
Octal board member Rashid Saif Al Sadi presented crystal awards to Bank Muscat and Bank Dhofar. The banks participated in Octal’s initial investment of US$350 million announced last November.
Octal board member Rashid Saif Al Sadi said: “Octal is fulfilling its expansion strategy to become a homegrown global petrochemicals leader, and the involvement of Oman’s leading financial institutions has been critical to our success. We thank our Omani bankers, the Salalah Free Zone and the Oman government for their support.”
He said: “Octal is the largest exporter from the port of Salalah, a growing employer and a significant investor in local and regional suppliers. We have come a very long way in a short space of time and our progress would not have been possible without the confidence of local and regional investors. Octal’s rapid development shows the potential of Oman as a location for manufacturing and the qualities of doing business in Salalah Free Zone.”
Operational in six months, phase one 2006 saw Octal’s entry into PET sheet production for global export. Octal’s second plant, built in 19 months, will ramp up production of PET resins starting this October.
Rashid Saif Al Sadi expressed special thanks to BankMuscat for its lead advisory, trade finance and treasury expertise and thanked BankDhofar for participating in the lending process.
AbdulRazak Ali Issa, Chief Executive, Bank Muscat thanked Octal and said, “We are happy to be involved in Octal in various roles. Our involvement as financial advisor, equity investor, Mandated Lead Arranger and the largest lender demonstrates our confidence in this Omani project and its prospects”.
Kris Babici, Chief Executive Officer of BankDhofar, said: “BankDhofar is proud to be associated with Octal, and we have a strong emotional attachment to this project because it has been set up in the Dhofar region. The company’s initiative is well conceived and is being executed with precision.”
Octal estimates global yearly sales at the rate of US$450 million by the end of the year. Monthly sales currently exceed US$4 million. A new sales office will open in Europe by the end of the year, complementing sales offices in Dallas and Shanghai.
Octal Petrochemicals’ other Oman-based investors include NIFCO (National Investment Fund Company), Muscat Overseas Group, Oman Investment Company, Malatan Trading and Contracting, Oman and Emirates Investment Holding, Suhail Bahwan Group, and DIDIC (Dhofar International Development & Investment Holding Company), and BankMuscat. Individual and institutional investors from Saudi Arabia, Kuwait and the US are also onboard.
Octal’s phase-two expansion will make it the largest polyester company in the Middle East and one of the biggest on one site outside China. Octal expects staff numbers to reach 300 by the end of this year and it will continue its aggressive recruitment drive well into 2009.
Octal has also commissioned the first phase of a liquid chemicals terminal at Salalah port, the first ‘tank farm’ of its type in the region. The first two 5,000 metric ton tanks at the terminal are designed to receive mono-ethylene glycol (MEG).
Nicholas Barakat, Managing Director of Octal Petrochemicals, said: “Octal has so far generated sales worth more than US$55 million through its offices in Europe, China and the US. Customers understand the distinct quality advantages involved in our integrated one-site production model. The efficiencies we bring are increasingly attractive in the current environment of high energy costs.”
Between 2009 and 2012 more than 20 million metric tons of plastic raw materials capacity will come on-stream in the Gulf. Octal’s aggressive expansion will allow it to penetrate the global market for PET resins, estimated at 15 million metric tons last year and growing at around 1 million metric tons per year.
Octal’s pioneering DTS (direct to sheet) technology involves producing PET resin on site and then making amorphous PET sheet directly from the melted resin. Conventional PET production requires energy-intensive, expensive drying and melting of granular PET or ‘chips’, and the final product has lower optical and mechanical properties than Octal’s integrated PET sheet.
Based at Salalah Free Zone, Octal Petrochemicals’ integrated PET and PET sheet production plant is being built at an initial cost of US$350 million. Total investment on the site is set to rise to as much as US$1.4 billion upon completion. Net exports are expected to reach US$1.1 billion by 2011.
