State-of-the art CCPP fires Oman’s new aluminium smelter

Oman has commissioned a 1000 MW combined-cycle power plant (CCPP), the biggest in the Sultanate. Designed and built by Alstom at a cost of $476 million to supply exclusively a vast new greenfield aluminium smelter, the high efficiency Sohar Aluminium power plant was delivered on programme and within budget.
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Situated some 240 km northwest of the capital Muscat, the new 1000 MW combined-cycle gas turbine (CCGT) Sohar Aluminium power plant (SAPP) boasts a number of ground breaking credentials. It is the biggest of its kind in this progressive Sultanate and features Alstom’s proven combined-cycle technology for aluminium applications. The purpose of the power plant is to provide power to an aluminium smelter so reliability and robustness of the power supply are the main priorities. Thus, a key design requirement was the need for highly reliable electricity generation in order to secure the constant power demand of the smelter over the entire year and throughout its life. Additionally, the plant was designed to accommodate large power load changes from the aluminium smelter and restore power rapidly if required.

Construction of the innovative captive power plant has survived hurricanes and achieved compliance with strictly observed industrial emissions and health and safety laws to secure its rightful place as one of the most challenging projects in the region in recent years.

Built by Alstom on a turnkey engineering, procurement and construction (EPC) and commissioning basis, the power plant is based on Alstom’s proven and mature KA13E2 combined-cycle technology, which has over five million operating hours worldwide. This technology provides not only high plant efficiency (>50 per cent at high ambient temperatures), but also exceptional operational availability. Several references dedicated to aluminium plants demonstrate the high reliability of the KA13E2.

The SAPP contract in Oman adds to Alstom’s recent successes in combined-cycle power development in the region. Prior to Sohar, the company completed work on a similar facility for the Aluminium Bahrain (Alba) Line Five smelter expansion project.

The Sohar Aluminium CCPP is aimed exclusively at powering a greenfield aluminium smelter operated by the Sohar Aluminium Company, Logical Link Control. Together, the smelter and power plant brought a welcome boost to employment opportunities in the Al Batinah Region and represent one of the largest investments in the country in recent years.

Plant Design and Layout

The SAPP is an entirely new CCGT power plant, located at the Port of Sohar on the north coast of Oman, some 12 km distant from the inland smelter it supplies. The plant consists of two blocks in a two-on-one configuration. Each block has two Alstom GT13E2 gas turbines exhausting to a heat recovery steam generator (HRSG) with a common steam turbine.

The gas turbines themselves can be operated either in a power or lifetime optimized mode. For SAPP they are intended to normally operate in the lifetime optimized mode at high part load with a slightly reduced turbine inlet temperature, in order to permit an extension of the increased equivalent operating hours (EOH) to 36000 EOH between hot gas path-inspections. Additional power can be made available by operating the gas turbines in the power optimized mode at higher turbine inlet temperatures and, if necessary, at peak firing.

The steam turbines have a nominal site rating of 140 MW, at a seawater temperature of 35 à‚°C, based on the steam delivered by two HRSGs without considering the input of supplementary firing. Evaporative cooling on the air inlet increases the gas turbine rating to a nominal 149 MW at 46 à‚°C.

Supplementary firing on the HRSGs can increase steam turbine power output to a maximum of 218 MW. Each CCGT block has a maximum net power output performance guarantee of 500 MW net at 46 à‚°C when firing gas. The use of evaporative cooling and supplementary firing to provide this maximum level of power output is only foreseen in emergencies.

As the gas turbines are dual-fuel fired a two-day supply (6600 m3) of distillate fuel oil is kept on-site for emergency back-up use. For this reason the gas turbines are equipped with an auto change-over facility from gas to oil in the event that the gas pressure falls below a minimum value. Manual change over in both directions (gas-oil-gas) is also provided.

Each CCGT block has a maximum net power output performance guarantee of 391 MW at 46 à‚°C when firing fuel oil.

The cooling water supply to SAPP is provided under a seawater supply agreement with a maximum temperature rise of the cooling water restricted to 10 à‚°C under the terms of Sohar Aluminium’s environmental permit.

The SAPP has a reverse osmosis desalination plant with a capacity of 140 m3/h and two export water pipelines to transfer desalinated water to the smelter. A portion of the desalinated water production is demineralized for use in the HRSGs and the gas turbine evaporative coolers. SAPP has two 3000 m3 desalinated water storage tanks and two 500 m3 demineralized water storage tanks.

The power generated by the four gas turbines and two steam turbines is stepped up to 220 kV and delivered to a 220 kV GIS substation on the SAPP site. The SAPP 220 kV GIS substation consists of a standard double busbar design with bus section and bus coupler switches.

From the SAPP 220 kV GIS substation, two overhead line circuits (the first 2.5 km is buried cable à‚— 2500 mm XLPE single phase à‚— within the Port of Sohar boundary), each rated at 787 MW, deliver the power to the smelter 220 kV GIS substation situated some 12 km inland.

Additionally, from the SAPP 220 kV GIS substation, two cable circuits connect to the Oman Electricity Transmission Company’s (OETC) 220 kV GIS grid substation on the adjacent plot of land in the Port of Sohar. Each cable circuit is rated 300 MVA and the length of each circuit is 500 metres.

SAPP’s turbine hall, which houses Alstom’s well-proven GT13E2 gas turbine technology
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The OETC substation is connected to the rest of the Oman Grid via two 220 kV overhead line circuits (the first 2.5 km is by underground cable, similar to SAPP) and also provides power via two cable circuits to the Port of Sohar 220 kV/132 kV GIS substation approximately 1.5 km away.

The OETC 220 kV GIS substation features a standard double busbar design, similar to that at SAPP. The cable interconnectors between SAPP and OETC have standard differential, over-current and earth fault protection. In addition, under- and over-frequency protection is provided to protect the security and stability of the OETC grid from a smelter potline trip or a loss of more than one generating unit at SAPP.

Despite intermittently harsh weather and a tight construction timetable, Alstom was able to deliver the project on programme and within budget. This is due in no small part to the engagement of the client, contractor, and the client’s consultant, Mott MacDonald, from the outset. “Sohar Aluminium and Mott MacDonald were fully involved with Alstom right from the beginning of the design stage. Regular weekly and monthly review meetings helped us achieve the project we wanted. The project was completed within the budget,” explains Rajagopalan Krishnan, Sohar Aluminium’s chief engineer and head of the power project.

“Sohar Alminium gives very high priority to safety. Alstom achieved this requirement by clocking more than 12 million man-hours without any lost time incidents. This was in spite of harsh weather conditions, a very tight schedule and peak manpower of around 2500 workers. We achieved this by regular safety walks, meetings, tool box meetings, safety inductions and re-inductions.”

Project Scope

After a ‘lead-in’ period approaching a year after negotiations began, it was at the end of 2005 that Alstom won the contract from Sohar Aluminium Company for the turnkey construction and long-term maintenance of the 1000 MW SAPP. The scope of the contract was to cover the engineering, supply, building and commissioning of the plant, along with a 15-year long-term service agreement for gas turbines, generators and auxiliaries. Construction of the project began in mid-December.

The power plant is based around Alstom’s renowned GT13E2 gas turbine technology, the company supplying a total of four units along with four HRSGs, two steam turbines, six generators, a digital control system and ancillary balance of plant.

At the time of the signing of the contract, the Sohar project raised the total of GT13E2 machines sold by Alstom to 106 units. Worldwide, the fleet has now accumulated more than 5 million operating hours and 139 units have been sold.

The order also included an option for a second phase of development at Sohar, adding a further 500 MW of capacity in the future, by buying a further two GT13E2 gas turbines, two HRSGs, a steam turbine and three more generators.

Alstom was confident it had the right products at the right time for this challenging industrial application. Philippe Joubert, president of Alstom Power Sector, commented: “Aluminium smelting demands flexible, reliable and powerful power plant equipment, making the Alstom GT13E2 technology an ideal choice. Alstom’s leading technology and ability to deliver and service power plants à‚— cornerstones of our Plant Integrator capability à‚— were key in winning this contract.”

Alstom’s Plant IntegratorTM concept is designed to harness the company’s expertise both at the component and plant level. Alstom is an original equipment manufacturer of all the major power plant components, including gas turbines, steam turbines, turbo generators, HRSGs, control systems and environmental control systems.

The in-depth understanding of these components puts the company in a unique position to integrate and optimize the entire power plant to achieve optimum performance and offer truly tailor-made power plants that meet even specific power requirements as those of an aluminium smelter. For the Sohar CCPP, the execution of a black-start facility and the customization of the machine control to interact with the aluminium smelter operation successfully demonstrate this customization capability.

Alstom as a major EPC contractor with experience from over 350 turnkey plants globally and with 27 gas power plants under construction today, can deliver turnkey power plants worldwide. It also has a strong operation and maintenance (O&M) organization that can service the power plant, once operational, from the supply of spare parts to providing full O&M contracts.

KA13E2: Ideal Combined-Cycle Solution

The SAPP is based on Alstom’s KA13E2-2 CCPP technology. In its basic form the KA13E2 is a reliable, high performance solution in the conventional class for the 50 Hz market; it provides substantial response capability to peak demand or back-up generation needs. Ideal for peaking applications and suited to phased construction, it can be converted to CCPP for intermediate load duty.

Worldwide, Alstom’s KA13E2 power plant has an impressive list of references in a wide range of turnkey applications, including combined-cycle, cogeneration (industry, desalination, district heating and, importantly for Sohar, aluminium smelters) and offers significant benefits to customers.

A simplified flow diagram of the Sohar Aluminium CCPP, which offers high availability and operational flexibility
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These benefits include competitive performance in the conventional class, cycle optimization for very specific client applications (e.g. supplementary firing or power augmentation), high availability and reliability, excellent plant operational flexibility and plant dispatch (quick start-up, black start) and can accommodate sudden load changes, active grid frequency support, and partial or global load rejection. Similarly, the unit offers fuel flexibility and low emissions operation benefits.

Fast start-up means faster availability of power and reduced fuel consumption: Each gas turbine can respond quickly with a load gradient of 8 MW/minute to 25 MW/minute in response to increased power demand. The unit offers increased reliability under changing gas composition and increased flexibility in gas supplier selection. Fuel flexibility and ease of switch-over between oil and gas means continuity of availability in the event of main fuel supply failure.

System reliability is increased because of a superior support functionality of the KA13E2 and its unique flexibility to adjust to changing market requirements.

GT13E2: Operational Flexibility

Alstom’s GT13E2 gas turbine represents state-of-the-art in conventional gas turbine technology, but with superior performance and extended operation interval capability. The GT13E2 gas turbine offers the highest engine efficiency of conventional class gas turbines, while offering long inspection intervals. With millions of fired hours of operation to its credit, the GT13E2 is the core of the power plant, designed to produce reliable, competitively priced electricity continuously.

The GT13E2 offers flexibility through two online-switchable operating modes à‚— one maximizes performance (power optimized operation), the other operating time between inspections (lifetime optimized operation mode with 36000 EOH between hot gas path inspections). In addition, the engine can actively support grid frequency with exceptional high response of up to 6 MW/second and without additional lifetime factors.

Key benefits include the highest open cycle efficiency of conventional class gas turbines à‚— close to 37 per cent (ISO) à‚— with a high exhaust energy level and significant fuel cost savings over competing technologies for a wide variety of applications. At the same time, lower operating costs are not compromised by higher maintenance costs, thanks to the extended inspection interval.

The gas turbine can operate in either a performance optimized mode or a lifetime optimized mode without having to change hardware; both modes enable the customer to respond to increasingly volatile markets by allowing the operator to select online the best operating mode to maximize profit.

Moreover, the GT13E2 affords the ability to handle wide fluctuations in gas composition and delivers similarly reliable operation under fuel oil consumption.

A welded rotor requiring no scheduled maintenance eliminates the need for major overhauls; the fully annular combustor obviates the need for any combustor inspections, and overall maintenance intervals of up to 36 000 EOH between hot gas path inspections are the norm, making the GT13E2 a wise choice for operating regimes with a relatively high sensitivity to O&M costs and availability.

TOPAIR Turbogenerator: Solid Track Record

SAPP has six TOPAIR units in total, serving the gas turbines (rated at 300 MVA) and steam turbines (rated at 225 MVA). The Alstom TOPAIR is the largest air-cooled turbogenerator in operation today and has accumulated worldwide operational experience from more than 1000 installed units and more than 40 million operating hours.

A relatively simple yet robust air-cooled turbogenerator with high reliability and maintainability, the TOPAIR comes in a range of 150-400 MW (50 Hz) or 90-300 MW (60 Hz), and can be employed where a hydrogen-cooled turbogenerator was used previously.

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In its basic form TOPAIR’s flexible design means it can fit any kind of installation arrangement, from table or floor mounted, single or double drive for gas turbines or steam turbines, and combined-cycle power plants. It can also be up and running quickly, thanks to its short production time that features parallel manufacture of stator and casing, pre-assembly, and ease of transport, minimizing erection and commissioning time and accelerating revenue flow.

The stator is designed for zero maintenance due to press fingers, press plates and key bars that hold the stator core under constant axial pressure. As a result, there is no expected loosening of the laminations. The stator core is made of low-loss insulated steel sheet and features Alstom’s patented flexible suspension, which minimizes vibrations by decoupling the core from the casing.

The TOPAIR’s reliability is assisted by Alstom’s MICADUR insulation system, the result of continuous development that began back in the 1950s, which consists of a glass fibre tape incorporating mica flakes. The taped bars are vacuum-impregnated with a solvent-free epoxy resin and thermally cured. Finally, the surface is coated with a corona protection varnish.

In addition, efficiency is enhanced by dual-layer stator windings using Alstom-patented Roebel bars to minimize eddy-current losses. The windings are held in the stator slots by double tapered concave-convex wedges.

Optimized Heat Recovery/Steam Generation

Alstom’s range of HRSGs are typically of the drum-type, once-through technology, with optimized hot and cold end performance for maximized combined-cycle efficiency, high thermal flexibility for fast start-up and of a highly modularized design for quick site erection.

The HRSGs at Sohar are horizontal, two-pressure, natural circulation type of the Alstom design with maximum steam conditions of 93 bar and 544 à‚°C. Mean flow is 85.7 kg/s (HP) and 13.8 kg/s (LP). Supplementary firing is provided to increase steam production and steam turbine power output if required, while exhaust gas bypass and damper are additional features. Each HRSG has a separate elevated de-aerator/storage tank that feeds two KSB barrel-type combined LP/HP feedwater pumps.

The Sohar Aluminium captive power plant, which supplies exclusively a new greenfield aluminium smelter, is currently the largest power station in the Sultantate of Oman
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The condensers are of single-pass titanium tubed design and are installed to the side of the steam turbines rather than in the more usual under-slung position. This arrangement significantly reduces the height, complexity and cost of the steam turbine foundations, as well as reducing the overall height of the turbine hall. Condensing plant operates at a water temperature of 35 à‚°C and at a pressure of 98 mbar.

A 140 m3/h two-pass reverse osmosis plant provides desalinated water for the power plant and the smelter. Desalinated water at the power plant is processed through a 40 m3/h ion exchange demineralization plant to provide water for make up to the HRSGs and for use with the gas turbine evaporative coolers.

Four main pumps are installed at the seawater intake, which is sited 800 metres away from the power plant. Each pump has a nominal rating of 14 000 m3/h. The pumps are vertical mixed flow units fabricated from duplex stainless steel and supplied by an Alstom subsidiary. The pumps discharge into a common header from which two 2.4-metre diameter glass reinforced plastic (GRP) seawater pipe feed the steam turbine condensers (one pipe to each condenser). The seawater from the condensers is discharged via two 2.4-metre diameter GRP pipes to a common outfall channel serving all the industries in the Sohar Industrial Port area.

SAPP’s steam turbines consist of two-cylinder (combined HP/IP cylinder and separate double flow LP cylinder) tandem compound units supplied by Alstom. Turbine MCR is 217.8 MW when the HRSGs are supplementary fired. Output is a nominal 140 MW with the gas turbines at baseload and HRSGs operating without supplementary firing.

Challenges Faced & Overcome

SAPP is located inside a port industrial area and as such its construction required a large number of clearances and permits from several agencies and assorted local authorities. Because it is located close to the sea the area’s highly corrosive atmosphere had to be taken into account. Its location also meant that very stringent environmental regulations had to be satisfied in respect to waste management, air and water pollution and non-disturbance of marine life.

As if these were not enough for the construction team to contend with, extraordinarily bad weather was encountered during the project on two separate occasions during the construction phase. Unprecedented rainfall in March 2007, bringing flooding in its wake, resulted in delays, as well as damage to equipment and structures. On this occasion ‘force majeure’ was accepted by the customer (allowing a suitable time extension for Alstom) and an appropriate insurance settlement was made in respect of the cost incurred in rectification and replacement of the affected structures.

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In July of that same year, Hurricane Gonu hit Oman bringing disruption to the construction schedule and, although there was no loss or damage to any equipment or structures, the event caused a major setback at Alstom’s subcontractor’s facilities. The customer again accepted force majeure and granted suitable extension of time.

Neither was the project without its planning obstacles. The 12 km distance between the power plant and the smelter called for the provision of two key facilities: a double circuit 220 kV overhead line feeding power from the power plant to the smelter and two 250 mm diameter GRP export water pipelines feeding desalinated water to the smelter.

While the 220 kV overhead line lies in a permitted corridor crossing an area shared by various utilities, as well as the main highway between Oman and Dubai, the export water pipeline is a cross-country installation, which passes directly under a seawater channel, highway, culverts and other infrastructures.

Construction of both these facilities required close coordination between the various utilities and other agencies in order to get their permission and NOC. The construction team also had to circumvent a number of other obstacles presented by existing structures, including underground pipelines, culverts and seawater channels.

These exercises required a total of 230 permits from various utilities, agencies and authorities. Each permit involved complex negotiations taking up to three months and the whole process took two and a half years.

From the outset the works had to be compliant with Oman laws and regulations. As a consequence there was to be a mandatory provision of providing jobs to the local population; in the event, the project was carried out using 25 per cent Omanisation at the start, rising to 30 per cent midway through the contract.

The fact that it was difficult to get qualified persons locally added to the difficulties in obtaining visas for expatriates. Further, the contract’s managers had to contend with very stringent environmental regulations for wastewater treatment, subsoil water extraction, hazardous waste management and protection of marine life (ensuring seawater discharges remained at less than 10 à‚°C), in addition to strict controls on air and soil pollution.

Reliable & Robust Power Supply

That the initial synchronization of the first steam turbine for SAPP was successfully achieved in January of this year is an indication of the effort expended in ensuring the plant was up and running on schedule, despite the setbacks of weather and the unique, technical complexity of the project.

First synchronization signified a great achievement for the Alstom plant team because it demonstrated that the main equipment at the plant was working properly and was on track for handover to its customer on 22 May 2009.

SAPP is conceptually complex because the plant has a very small grid with an extremely sophisticated and flexible control system.

Sohar Aluminium was formed to own and operate the smelter itself, and will have a single AP35 potline together with associated carbon and casting facilities. Ultimately, with phase two, the smelter will have access to its own 1400 MW gas fired power plant. Serving all of this is a comparatively small grid.

The output of the six generating units of the plant is connected to double bus/double GIS switchgear. The output is connected to redundant overhead connections to the smelter. This extra high voltage system is therefore highly fault tolerant, enabling an extremely high level of availability of power supply to the smelter. There is also a low power connection to the local Oman grid.

SAPP has its own black-start diesel generators, capable of starting any of the four gas turbines. And here the complexity of the installation becomes even more apparent. Start-up of the Sohar Aluminium grid with a single gas turbine from a ‘black’ condition requires closure of all the circuit breakers between the gas turbine and one or both of the smelter’s main auxiliary transformers (MATs), while the voltage on the complete Sohar Aluminium grid is then raised using the excitation of the gas turbine.

This ‘soft start’ procedure to recover the Sohar Aluminium grid from the black condition is necessary because of the severe voltage dip caused by the inrush current if the MATs are switched in at full system voltage.

Once the Sohar Aluminium grid voltage is re-established and the MATs are in service, auxiliary load is increased until there is sufficient to allow two more gas turbines to be run-up and synchronized. With three gas turbines in service there is sufficient capacity to allow the rectiformers to be energized and the smelter potline to be started.

When operating alone, the small size of the Sohar Aluminium grid also requires an increase in the droop of the gas turbine speed governors to 14 per cent to maintain stability. This change in the gas turbine governor droop is triggered automatically by monitoring the position of the four circuit breakers on the interconnectors between the Sohar Aluminium grid and the Oman grid to detect if it has become disconnected from the latter.

Similarly, the four circuit breakers on the two overhead line circuits from the SAPP to the smelter are monitored to detect if SAPP has become completely disconnected from the smelter, in which case the steam turbines are tripped and the gas turbines are given a load rejection signal that brings them back to ‘house load’, supplying their own auxiliaries. They are then immediately ready to restart the smelter as soon as at least one of the overhead line circuits to the smelter is re-instated.

In the event of a trip of a generating unit at SAPP, when the Sohar Aluminium grid is operating alone, automatic fast de-loading of the smelter potline is triggered by under-frequency relays on the 220 kV grid. Potline de-loading continues until the frequency rises above 49.8 Hz. Reloading of the potline is initiated from the SAPP control room when sufficient generating units are available.

In the event of a potline trip à‚— resulting in the immediate loss of 570 MW load à‚— when the Sohar Aluminium grid is operating alone, the grid control system immediately trips any running steam turbines and sends a load rejection signal to all but one gas turbine that brings them back to house load supplying their own auxiliaries.

One gas turbine remains connected to the Sohar Aluminium grid, but is automatically de-loaded to an output that matches the auxiliary power demand of the smelter, thus avoiding a complete black-out.

Restoration of power to the smelter potline, following an interruption or potline trip is critical. Two hours is the target for return of the smelter potline to full load following a power interruption. The Sohar Aluminium grid, smelter and SAPP control and protection systems have therefore been configured to achieve this target.

Advanced Plant Control System

SAPP’s control system is overseen by Alstom’s ALSPAà‚® proprietary technology. This state-of-the-art but well proven system provides high levels of redundancy, whilst at the same time affording simplicity of operation.

The control system requirements are up to the usual high standards required in a modern power plant environment. A high level of automation is provided to all the necessary systems of the plant.

At the centre of each of the two KA13E2 units at Sohar is the ALSPA Distributed Control System (DCS). Controls are also provided for the switchyard (C10) and the steam turbine controller. In total, six controllers and 20 I/O (input/output) racks were supplied for the DCS and the steam turbine controller. Two extra controllers and eight I/O racks were installed for the commons of the DCS and the steam turbine. The switchyard is controlled using two controllers and 15 I/O racks.

Alstom has developed a complete range of automation solutions under its ALSPA brand name, which targets both the power generation and grid utility markets, and the technology features in some of the world’s largest and most critical power plants.

ALSPA DCS leverages and integrates the latest technology whether for fieldbus or advanced control to enable smooth, safe and optimal operation of power plant critical components.

Using a completely integrated architecture, the technology brings together a unique real-time data management infrastructure, placing the most accurate operational environment at the plant operator’s fingertips. It incorporates flexible desktop monitoring of plant operations using networks and a range of sophisticated management tools.

At the centre of this set of tools is the engineering workplace CONTROCAD, which allows operators to access all plant control and automation schematics through a set of advanced standard function block libraries assembled from Alstom’s extensive experience of DCS in power plants from around the world.

The ALSPA product line covers a wide range of applications from the control room with plant management, operation and optimization tools through plant and machine automation to asset management and remote diagnostic systems.

The ALSPA control system integrates the latest innovative technologies for Alstom plants and control solutions. Owing to its scalable and modular design concept, ALPSA can be integrated into a wide variety of applications, from stand-alone turbine controllers and automatic voltage regulators to global power plant automation systems, for both new and retrofit projects.

The delivery of SAPP has shown complex, large-scale power projects are capable of satisfying clients’ demanding programme targets; it is especially important when high-value industrial operations such as aluminium smelting are dependent upon prompt accessibility. An integrated approach, engaging the client, contractor and designer-consultant from the beginning has resulted in a coherent and, ultimately, successful project.

Securing the Finance

Although one of the largest projects to be undertaken in the Sultanate of Oman to date, the $2.4 billion Sohar Aluminium project was nonetheless hugely successful in attracting the necessary funding. It took only eight months to obtain full financial close and secure Islamic financing as a significant element of the project à‚— a notable first for Oman.

The project also secured the highly coveted 2005 Industrial Deal of the Year (Europe, Middle East and Africa Region) Award from Project Finance International magazine.

The smelter and power plant project was financed 60 per cent by debt and 40 per cent by the shareholders involved. Citigroup, the project’s financial advisors, together with the sponsors and shareholders, secured an initial $1.46 million term loan facility and the deal, structured on a fully documented project finance basis, was closed on 11 December 2005.

For the first time on a capital project in Oman, the finance package included an Islamic facility amounting to $260 million – or around 10 per cent of the total project cost à‚— being fully Shari’a Board compliant. Associated with the deal were lease and buyback opportunities citing a number of identified project assets. Overall, the project finance package was robustly structured to withstand the severest of downside market scenarios.

Retrospectively, the finance team say the timing of its approach to the market was exceptional in that there was adequate liquidity, as well as a healthy appetite for solid projects such as Sohar. A sound financing strategy was adopted and this achieved the desire result for the sponsors.

Key to the financing strategy was the fully documented approach to market, says the finance team, which resulted in minimal mark-ups to the documentation and led to securing the financial close on schedule.

A ‘lean’ approach to the financing process achieved an early success, with only eight months from the shareholders’ agreement in February 2005 to the commitments from the four initial mandated lead arrangers (MLAs) in October 2005.

The four MLAs were Citigroup, ABN Amro, SMBC and Export Development Canada. As it turned out, the commitment from the MLAs was ultimately much greater than the term loan required. As a result, further syndication was managed by the lead MLAs effortlessly, including negotiations with both regional and international banks.

Sohar Aluminium Project: Large Economic Investment

The Sohar Aluminium plant is a new generation smelter, a joint venture between Brazil’s Rio Tinto Alcan (20 per cent), Oman Oil Company (40 per cent) and Abu Dhabi Water and Electricity Authority (40 per cent). It was inaugurated in April 2009 at the industrial town of Sohar a former capital city in northern Oman.

The $2.4 billion AP36 smelter, which is the first greenfield smelter to be established in the Middle East in more than 30 years, was inaugurated by His Highness Sayyid Shihab bin Tariq Al Said, adviser to His Majesty the Sultan.

Maqbool bin Ali Sultan, minister of commerce and industry and chairman of Oman Oil Company, said, “The Sohar Aluminium project is one of the largest economic investments ever made by the Sultanate’s government through the Oman Oil Company.”

He added the Sohar Aluminium project would help to create greater employment opportunities in the Sultanate, particularly in the Al Batinah Region.

Ahmed bin Salim Al Wahaibi, chairman of Sohar Aluminium and chief executive of Oman Oil Company, emphasized the importance of the project: “The project has been set up to produce… primary aluminium using the most efficient technology in the industry. Part of the product will be used locally and developed by downstream industries [while] the rest will be exported.”

Construction of the smelter began at the end of 2005, leading to the first hot metal being produced in June, 2008. It reached full capacity on 19 February this year. In the interim, Sohar Aluminium has worked on the training and development of Omani nationals both within and outside the Sultanate to work for the company.

With 360 pots à‚— the next largest plant has 336 à‚— the smelter will be able to produce up to 350 000 tonnes of aluminium annually. In addition to the enormous potline and the 1000 MW CCGT power plant, the project included construction of a carbon plant, a metal casting facility, and port facilities for storage and shipping.

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