Octal Petrochemicals to add 500,000 tpa of PET capacity

Octal Chairman Sheikh Saad Suhail Bahwan said the company's second-phase expansion will make it the largest polyester manufacturer in the Middle East and one of the biggest outside of China on one site.

Octal's integrated PET resin and APET sheet facility in the southeast city of Salalah will ramp up the new production capacity in two stages: 250,000 metric tons by March 2010 and the remaining 250,000 by May of that year. The company is targeting the soft drink and bottled water markets in Europe, the US and Middle East through its move into PET.

Sheikh Saad said: "Between 2009 and 2012 more than 20 million metric tons of plastic raw materials capacity will come on-stream in the Gulf. Octal is harnessing the region's strategic advantage and Salalah's unique location to deliver major growth in PET resin production for export as well as significant cost savings through our integrated, one-site operational model."

Sheikh Saad said: "Octal is fulfilling its expansion strategy to become a homegrown global petrochemicals leader. Phase one saw our entry into APET sheet for global export. Phase two will be a major step forward in PET resin production, and phase three will complete the integration of our state-of-the-art facility, realizing unprecedented cost and quality advantages."

Speaking at the Oman Economic Forum in Muscat today, Octal Managing Director Nicholas Barakat said: "Preliminary funding for phase two is already in place. Around $18m has been allocated for long-lead items and engineering work."

Fluor Corporation has been retained as technical advisor for the expansion and is preparing bid packages for the construction. BankMuscat will continue to serve as financial advisor.

Mag Fouad, Vice President of Technology at Fluor, said: "Octal is progressing towards the goal set at its outset in 2005 to become the largest and lowest-cost polyester company in the Middle East, a region where the key raw materials for PET are readily available."

Octal's phase-one facility is nearing completion and will produce 150,000 metric tons per annum (tpa) of PET by the end of 2008. By that time, the plant's total combined production capacity of PET and APET sheet will have reached 330,000 tpa.

Nicholas Barakat of Octal said: "The infrastructure for the second phase, thanks to the Ministry of Commerce and Industry and Salalah Free Zone, is now ready. The first MEG tank of the liquid chemicals terminal is complete, water treatment facilities are in place, and we have secured the environmental permits for the capacity increase."

Based at Salalah Free Zone, Octal Petrochemicals' integrated PET (polyethylene terephthalate) and APET (amorphous polyethylene terephthalate) production plant is being built at an initial cost of $300m.

Total investment on the site is set to rise to as much as $1bn upon completion. Global export sales capacity is expected to reach $500m by the end of this year and net exports will reach $1.1bn with the completion of phase three.

Awadh Alshanfari, Chief Executive Officer of Salalah Free Zone Company SAOC, said: "We are proud of our association with Octal's project and emphasize the free zone's commitment to its customers and growth plans. Octal's project is an important milestone for the free zone as it establishes itself as a major hub for global trade."