PORTS AND LO­GIS­TICS

Oil and Gas - - SPOTLIGHT -

Ports and lo­gis­tics have im­mense po­ten­tial to con­trib­ute to Oman’s eco­nomic di­ver­si­fi­ca­tion ini­tia­tives. So­har, Duqm and Salalah ports have at­tracted global at­ten­tion and are wit­ness­ing re­mark­able growth in the num­ber of ship­ping lines.

Dur­ing 2017, the ports han­dled about 4.8 mil­lion con­tain­ers, an in­crease of 21 per cent com­pared to 2016. The vol­ume of han­dling of gen­eral cargo in the Omani ports dur­ing the year 2017 rose to 18 mil­lion tons of cargo, an in­crease of 25 per cent over the year 2016. All these ports are de­signed to be full-fledged eco­nomic zones com­ple­mented by free zones, in­dus­trial es­tates, air­ports, road con­nec­tiv­ity and a link to the GCC rail­way net­work in the fu­ture.

The deep-sea So­har Port and ad­ja­cent free zone lie at the cen­tre of global trade routes be­tween Europe and Asia, ap­prox­i­mately 200 km from Mus­cat and 160 km from Dubai. The lo­ca­tion of So­har pro­vides an ad­van­tage for han­dling break bulk and project car­goes, and po­si­tions the port as a strong op­tion for trans-ship­ments across the Ara­bian Penin­sula. Since op­er­a­tions be­gan at So­har Port and Free­zone in 2004, cargo vol­umes across all cat­e­gories have grown by dou­ble dig­its to an aver­age of al­most 1m tonnes of cargo per week in 2015. The port is also emerg­ing as a sig­nif­i­cant re­gional au­to­mo­tive hub for the Mid­dle East, han­dling over 200,000 ve­hi­cles per year. Ca­pac­ity at the

port’s con­tainer ter­mi­nal – op­er­ated by Oman In­ter­na­tional Con­tainer Ter­mi­nal (OICT) – has more than dou­bled since the re­lo­ca­tion of com­mer­cial traf­fic from Mus­cat to So­har in 2014, and cargo vol­umes have risen from 329,000 twenty-foot equiv­a­lent units (TEUs) in 2014 to around 540,000 TEUs in 2015. In the sec­ond quar­ter of 2016 OICT added four new post-Pana­max quay cranes, ca­pa­ble of han­dling 20,000 TEU mega-con­tainer ships, as well as an au­to­mated truck ap­point­ment sys­tem, to re­duce turn­around times at the ter­mi­nal. Cur­rent ca­pac­ity at the ter­mi­nal is around 2m TEUs per year, and plans are un­der way to de­velop an­other con­tainer ter­mi­nal, with the ca­pac­ity to han­dle 5m TEUs per year. The growth in size and ef­fi­ciency at the cur­rent con­tainer ter­mi­nal has helped to de­velop new lines and con­nec­tions, in­clud­ing more di­rect links to Asia.

Global con­tainer ship­pers Ever­green and Han­jin in­cluded So­har as a reg­u­lar port of call in 2015, and Mediter­ranean Ship­ping Ser­vices (MSC), the world’s sec­ond­largest con­tainer ship­per, be­gan call­ing at So­har in 2016.

SO­HAR Port and Free­zone re­cently signed an agree­ment with Dredg­ing In­ter­na­tional NV – Earth Mov­ing World­wide LTD (DINV-EMW JV) for the de­vel­op­ment of Phase 1 of the SO­HAR Port South Con­struc­tion Pack­age I. To­talling an in­vest­ment of $24 Mil­lion, the agree­ment will see the de­vel­op­ment of the first 50 hectares of use­able land within the new port ex­pan­sion; which is ex­pected to be fully com­pleted by Q4 2018. The SO­HAR Port South De­vel­op­ment will sup­port in­creased trade flows in the Sul­tanate and will al­low ship­ping lines to launch more di­rect calls to the port, open­ing the doors to a greater va­ri­ety of cus­tomers com­ing to SO­HAR in the fu­ture. The added land area at the port will sig­nif­i­cantly boost our abil­i­ties to han­dle larger vol­umes of cargo traf­fic as well as cre­ate new and sus­tain­able jobs in So­har.

In­vestors are lin­ing up to take ad­van­tage of the ad­di­tional 200 hectares be­ing of­fered as part of the SO­HAR Port South De­vel­op­ment. One of the first in­vestors on-board is Trescorp, a Sin­ga­pore-based oil and pe­tro­leum prod­ucts trad­ing firm.

In Septem­ber 2017, the com­pany signed a pact with SO­HAR to de­velop a 45-hectare ter­mi­nal for han­dling, stor­age and blend­ing of crude oil, fuel oil and diesel at the port. Trescorp’s So­har ven­ture re­quires deep wa­ter berths of 25m drafts to han­dle su­per­tankers of up to 320,000 DWT ca­pac­ity. The to­tal in­vest­ment in the project, which will in­clude fa­cil­i­ties for other pe­tro­leum prod­ucts in the next phase, is es­ti­mated at $600 mil­lion and will gen­er­ate sig­nif­i­cant em­ploy­ment op­por­tu­ni­ties within SO­HAR Port and Free­zone.

The SO­HAR Port South De­vel­op­ment in­volves ex­ten­sive land recla­ma­tion, which will ul­ti­mately add 200 hectares in to­tal to the present ca­pac­ity of SO­HAR Port, which cur­rently stands at around 2,000 hectares. Un­der the terms of the de­vel­op­ment agree­ment, the First Phase in­cludes the en­gi­neer­ing, land recla­ma­tion and sta­bil­i­sa­tion, and con­struc­tion of ap­prox­i­mately 50 hectares of us­able land within the port area, to­gether with soil im­prove­ment, 1,310m of shore­line pro­tec­tion, storm wa­ter drainage, and nav­i­ga­tion aids. The con­trac­tor will also be re­spon­si­ble for man­ag­ing in­ter­faces be­tween neigh­bour­ing fa­cil­i­ties and in­fra­struc­tures. The vi­tal recla­ma­tion project will fa­cil­i­tate the ever-in­creas­ing de­mand for space at SO­HAR and will in­volve over 750,000m3 of earth­works in or­der to re­claim the area from the sea. An­other ma­jor task of the con­struc­tion process is the 1,310m shore­line pro­tec­tion, which will re­quire in ex­cess of 450,000 tonnes of rock. SO­HAR Port is cur­rently one of ma­jor ports in the Mid­dle East, a fo­cal har­bourthat links the Far East with the Arab Re­gion. The ex­pan­sion of the port’s planned in­fra­struc­ture is a key fac­tor that will con­tinue to sup­port SO­HAR and Oman’s rapidly grow­ing lo­gis­tics sec­tor over the com­ing years. With rapid de­vel­op­ments tak­ing place, cou­pled with the op­ti­mal lo­ca­tion of the ports, and the Sul­tanate’s rep­u­ta­tion as a re­li­able and sta­ble busi­ness en­vi­ron­ment, ports of Oman have bright days ahead, not only as a bea­con of growth and pros­per­ity for the re­gion but as a key player in achiev­ing the eco­nomic di­ver­si­fi­ca­tion goals of the Govern­ment.

The Sul­tanate has been keen to fo­cus on its lo­gis­tics sec­tor as part of the ninth five-year plan, given the po­ten­tial that it has to con­trib­ute to eco­nomic di­ver­si­fi­ca­tion. The lo­gis­tics sec­tor is con­sid­ered to be of great value to Oman as a means of al­ter­na­tive eco­nomic de­vel­op­ment, due to its strate­gic lo­ca­tion link­ing the East and the West, as well as avail­ing a route for eco­nomic cen­tres in the Asia-Pa­cific re­gion.

The lo­gis­tics sec­tor is be­ing po­si­tioned as a big con­trib­u­tor to the Gross Do­mes­tic Prod­uct (GDP) after hy­dro­car­bons. There has been re­newed fo­cus on di­ver­si­fy­ing the econ­omy, and lo­gis­tics is a sec­tor that Oman will be bank­ing on to achieve this goal. The lo­gis­tics sec­tor’s GDP con­tri­bu­tion is tar­geted at RO 3bil­lion in 2020, up from RO 1.1 bil­lion presently. Fur­ther, it is pro­jected to rise to RO 14 bil­lion by 2040. Oman’s strate­gic geo­graph­i­cal lo­ca­tion makes it unique to be­come one of the top 10 global lo­gis­tics des­ti­na­tions by the year 2040.

The Sul­tanate aims to pro­duce 80,000 jobs in the lo­gis­tics sec­tor by 2020. By 2040, this is set to in­crease to 300,000, along with a po­si­tion for Oman among the World Bank’s Top 10 Lo­gis­tics In­dex.

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