<a href="https://www.thenationalnews.com/business/energy/2022/12/28/sabic-teams-up-with-oq-and-kpi-to-set-up-petrochemical-complex-in-oman/" target="_blank">A refinery </a>on Oman’s eastern coast, which required $9 billion investment to build, has been resilient against <a href="https://www.thenationalnews.com/business/comment/2023/12/18/why-the-red-sea-attacks-pose-a-threat-to-energy-security/" target="_blank">recent disruption</a> in the Red Sea and may even benefit from the situation as global competition is affected. <a href="https://www.thenationalnews.com/business/2022/02/04/oman-opens-duqm-port-as-part-of-diversification-push/" target="_blank">The Duqm refinery</a>, also known as OQ8, is a joint venture between Kuwait Petroleum International and Oman’s state-run energy company OQ. The refinery, which opened this month, has a production capacity of 230,000 barrels per day, serving markets in East Africa and the Indian subcontinent. Duqm is "well positioned" to capitalise on the unrest in the Red Sea, said chief executive David Bird, as shipments of refined products from competitive sources in West Africa and Europe grapple with longer travel times around Africa. “We have been resilient to it as a result of our unique location and the markets we're serving,” Mr Bird told <i>The National </i>in an interview. Many of the refinery’s products are shipped to markets in India, Pakistan and Sri Lanka, while also drawing high demand in Kenya and Tanzania. Major shippers and operators have suspended operations in the Red Sea – a vital maritime route – following attacks on commercial shipping lines by Yemen’s Houthi rebels. About 12 per cent of seaborne oil trade and 8 per cent of liquefied natural gas passes through the Bab Al Mandeb. However, OQ8 is not “immune” to the effects it has had on global shipping markets, the company’s chief said. “It impacts every aspect of our business … our trade is not bilateral. There are insurers, charter parties [and] ship owners, so it impacts our business,” Mr Bird said. “No matter where you are in the world, insurance rates go up." Wood Mackenzie data shows 8.5 million bpd of crude oil and refined products use the Red Sea. However, violence at Bab Al Mandeb is leading to more than 20 per cent of oil tanker trade diverting via the Cape of Good Hope, the energy consultancy said in a research note this month. “With more than two weeks added to voyage times, freight rates have naturally increased, along with European refined product cracks,” Wood Mackenzie said. “The domino effect of this change to trade flows is likely to affect the global refining sector for some time to come." Duqm, which recently completed its 100th delivery of refined products, produces liquefied petroleum gas (LPG), naphtha, diesel, kerosene jet fuel, petroleum coke and sulphur. The second phase of the project involves the production of petrochemicals, a key area of focus for Gulf oil producers in recent years. In 2022, Saudi Basic Industries Corporation, better known as Sabic, signed an agreement with OQ and Kuwait Petroleum International to set up a petrochemical complex in the sultanate. The project, which includes a steam cracker and a natural gas liquids extraction plant, will use feedstock from the Duqm refinery. Saudi Arabia, Oman and Kuwait have conducted a new feasibility study on a petrochemical opportunity that is “slightly different” from what was planned initially and would be “much more resilient”, Mr Bird said. Duqm may gradually increase its capacity, while exploring the creation of new products such as bitumen bunkering fuel, military fuels, reformate and gasoline, Mr Bird said. “We are deep in feasibility of some options but before we go and ask for more investor cash, we have to show that we're competitive and a safe custodian of those funds,” he said. “We have to earn our right to grow.” The refinery is “re-evaluating” initial strategic decisions, including the possibility of refining different grades of crude oil apart from those supplied by its shareholders, Mr Bird said. “We're a marginal business so any option is on the table to enhance our financial resilience." However, he added such a decision would not be made “right now”. Mr Bird’s remarks come as ageing plants are being shut down in the US, the country with the world's largest oil refinery capacity. The costs associated with maintenance, regulatory compliance and fuel-specification upgrades are making these assets increasingly expensive to run, Mr Bird said. As a result, many of the ageing refineries are up for sale at “pennies on the dollar”, he added. “I think there will be another wave of supply destruction in developed markets and that will be positive news [for Duqm] … independent of whatever outlook we have on demand,” Mr Bird said.