Oman plans to invite bids to build a steam cracker plant worth $3.5 billion with a production capacity of one million tonnes a year of petrochemical products, two sources close to the project said on Tuesday.

The planned cracker would be built in the northern industrial port city of Sohar and produce polypropylene and polyethylene, which are used in making plastics.

The project will include building a 300-kilometre (190-mile) pipeline, a gas extraction plant and headquarters buildings, one industry source, speaking on condition of anonymity, told Reuters.

State-owned Oman Oil Refineries and Petroleum Industries Co (Orpic), which owns oil refineries in Sohar and Muscat, will finance the new steam cracker. A spokesman from Orpic declined to comment on the project.

A second source said bids would be invited next month and the project was scheduled to be completed in 2016.

"By then, the Sohar refinery's expansion will be completed because 50 percent of the feedstock for the steam cracker will come from this refinery," he said.

Oman is expanding the capacity of the Sohar refinery to 180,000 barrels per day from the current level of 116,000 bpd. The Gulf state has another refinery in Muscat producing 106,000 bpd. It also plans to build a 230,000 bpd refinery at Duqm.

Orpic is also designing a 280 km pipeline to carry refined products between Muscat and Sohar. – Reuters