Oman secures its future with SOHAR
The SOHAR deepwater Port opened in 2002, and the Freezone followed in 2010. The two are operated by the Sohar Industrial Port Company, a 50:50 venture between the Sultanate of Oman and the Port of Rotterdam. The influence of such a long-standing port operator has meant that SOHAR Port and Freezone has, from the start, offered a high level of experience and expertise and enables the Port, through partnership working, to operate safety and responsible business practices which are world-class.
Sohar’s location outside the congested Strait of Hormuz provides access to main markets in the Persian Gulf and Indian subcontinent. Competitiveness is further bolstered by the Freezone’s increasing size and diversity, and good land and air transport links. The Sultanate of Oman also actively encourages investment in its free zones by offering tax incentives, modern facilities — abundant and competitively priced power and water, as well as high-quality communications infrastructure — and a well-trained workforce.
Oman’s logistics sector is being positioned to be the biggest contributor to GDP after hydrocarbons. The National Logistic Strategy 2040 aims to increase logistics services’ contribution and create 300,000 new jobs. SOHAR’s management team is working closely with ASYAD, the strategy’s executing body, defining how to streamline procedures and regulations and grow trade opportunities. ASYAD is placing particular emphasis on strengthening the sea-air-land links within Oman and providing seamless and comprehensive logistics solutions for regional and global markets.
A growing asset
In 2017, SOHAR Port handled more than one million tonnes of cargo every week. Container traffic grew 37% over 2016, dry bulk volumes rose 25% and vessel calls increased 16.7%, reaching 3,075. The total number of containers handled rose 37%, approaching nearly 850,000 teu. Overall cargo throughput grew 12% to 58m tonnes, including dry, break and liquid bulk, containers, Ro-Ro and anchorage services. Ship-to-ship transfers more than doubled year-on-year to over 150. The steady growth in aggregate cargo volumes and investments, including the upcoming SOHAR Port South Expansion, is set to deliver increased cargo volumes and attract more industry.
The South Expansion will increase SOHAR’s present capacity of around 2,000 hectares by a further 200 and be earmarked almost exclusively for oil and gas-based investment.
“This expansion…. highlights our emergence as a logistics hub of choice within the Middle East. Investors are lining up to take advantage of the additional 200 hectares being offered.”
Mark Geilenkirchen, SOHAR Port and Freezone CEO
SOHAR Port and Freezone CEO, Mark Geilenkirchen, said: “This expansion is essential for Sohar Port and Freezone to compete on a larger scale and highlights our emergence as a logistics hub of choice within the Middle East. Investors are lining up to take advantage of the additional 200 hectares being offered.”
New developments within the Port and Freezone will generate a further rise in port traffic, increasing demand for essential services such as fresh water supply, waste collection and bunkering services. To cater for demand, new bunkering services will be launched this year. SOHAR is also studying the feasibility of an LNG terminal.
The Freezone was originally planned around three key industrial clusters — Logistics, Metals and Petrochemicals — but a fourth has since been added with the launch of the SOHAR Food Cluster, complemented by the first dedicated agro-bulk terminal in a region heavily dependent on food imports.
The original three clusters have experienced significant recent development.
In September 2017, India’s Pittie Group signed up to develop a new $300m cotton and yarn plant. Planned to produce 100,000 tonnes of cotton yarn per year and generate over 1,500 jobs, it aims to transform the Freezone into a manufacturing hub for textiles and garments, and provide downstream opportunities in the clothing sector.
In October 2017, operations began at the first Chinese factory located in the Freezone, the Changbao Oman Oil Pipe Company. The state-of-the-art, $20m, 21,200m squared facility is expecting to produce up to 50,000t of tubing products annually.
State-owned Oman Oil Refineries & Petroleum Industries (Orpic) is boosting refinery capacity from 120,000 to 180,000 barrels per day and building the $6.5bn Liwa Plastics Industries Complex (LPIC) project. This is the largest of three strategic growth projects undertaken by Orpic to fulfil its vision of building an Omani integrated refining and petrochemical business. When completed in 2020, it will transform Orpic’s product mix and business model.
Existing ferrochrome producers are expanding into other ferro-alloy projects to boost metals output. This is part of a push to grow the Metals Cluster, complementing and supporting iron and aluminium industries at SOHAR.
Looking ahead, a deal with a UK-led consortium will see SOHAR house the first rare earth metal plant of its kind outside of China. This will manufacture antimony metal and trioxide, a precious mineral widely used as a flame retardant.
Notably, agreements with two of Oman’s biggest business houses will see pre-delivery inspections made on 200,000 vehicles annually at dedicated facilities within the Freezone – including the latest models of Toyota, Daihatsu, Lexus, Kia, Ford, Nissan, BMW and Hyundai.
Growing the food sector at SOHAR has involved bringing both public and private-sector clients to the cluster. It is important commercially and to bolster national food reserves. It has also enabled SOHAR to capture a larger slice of the food products cargo trade in the region.
The new 45-hectare Food Cluster will include a major flour mill, a world-class sugar refinery and a grain silo complex. The flour mill, operated by Sohar Flour Mills, will produce 500 tonnes of flour per day, while the planned sugar refinery, owned and operated by the Oman Sugar Refinery Company, boasts a production capacity of one million tonnes per annum. The dedicated agro-bulk terminal adds capacity to Oman’s strategic food reserves and joins independent terminals operated by world-class companies that include C. Steinweg Oman for general cargo, Oiltanking for liquid cargo, and Hong Kong-based Hutchison Ports for containers.
During 2017, SOHAR maintained a keen focus on increasing cargo volumes to attract larger ships, optimising energy usage, developing the food cluster, expanding capacity and capabilities, and attracting new investors to the Freezone.
In 2018, it has adopted the theme of ‘Smarter Thinking’, aiming to further streamline operations and improve efficiencies. A ‘Smarter Thinking culture’ is defined as one that ensures innovative ideas are freely shared and championed.
Examples include capturing steam from the oil refining business and using it to provide energy to other Freezone businesses, a study into the conversion of port vehicles to run on hydrogen, and installation of solar cells around the head office to reduce the amount of electricity drawn from the power grid.
The Port and Freezone combine environmental responsibility with social responsibility.
The local workforce includes a high percentage of talented young Omanis, in line with the government’s vision to grow the number of sustainable careers in the private sector. The port and Freezone, including the industries within it, are largely Omanised, with the current overall number of nationals at more than 60%.
SOHAR is at the heart of Oman’s economic diversification strategy. As new industries and businesses come online, SOHAR’s managers expect a significant rise in the number of career opportunities on offer to the indigenous workforce, helping to secure the future of the sultanate’s growing youth population.