MANUFACTURING INSIGHT 2019

DR ANCHAN C K

Oman continues to offer a strong value proposition for businesses, with a wide range of industrial estates and special economic zones (SEZs) adding to the attraction. Oman’s geostrategic location is also a considerable advantage, while ports and airports connect it to some of the world’s busiest trading routes and most dynamic markets. The push to increase manufacturing investment is further supported by government plans to quicken the pace of privatization.

According to the National Centre for Statistics and Information (NCSI), non-oil exports surged in the first half of 2018. Between January and April, non-oil exports increased by 23% year-on-year (yo-y), to OR1.32bn ($3.4bn), with reexports also expanding by 23.3% to OR583.4m ($1.5bn).

Non-oil export growth in the first half of 2018 was similar to that of the first quarter at 24.2% y-o-y, hitting OR1.97bn ($5.1bn).

This upswing was attributed to major increases in Omani exports to Qatar, which were up 164.2% yo-y in the first six months of 2018, to OR202.1m ($542.9m)

NCSI data shows that in 2017 oil and gas accounted for 58.2% of total export revenues, or OR12.65bn ($32.9bn). In terms of non-oil commodities, mineral products, chemicals and machinery were the top three. Including re-exports, the first – classified as mineral fuels, lubricants and related materials – accounted for 20.5% of the total; chemicals and related products, for 19.9%; and machinery and transport equipment for 18.6%.

Oman is naturally well situated for petrochemicals development. In recent times the increased emphasis on ICV (In country Value) has also benefitted this downstream industrial segment, as the sultanate tries to heighten value added from its diverse natural resources, Tied to this is the drive to boost the ICV programme, under which companies bidding for contracts must allocate a certain percentage of their inputs to domestically produced goods and services. ICV has been particularly strong in the oil and gas sector, which is a major market for many equipment and machinery manufacturers.

Sohar Refinery Improvement Project (SRIP), has boosted ORPIC’s fuel production by 4.2m tonnes per year to 13m tonnes and added five new units to the plant: a crude distillation unit, a vacuum distillation unit, a delayed coker unit, a hydrocracker unit and a bitumen blowing unit. The new facilities boost production of fuels, naphtha and propylene by around 70% – necessary steps in the production of feedstock for ORPIC’s aromatics and polypropylene plants. These are located at Sohar, with the first producing benzene and paraxylene, which are key chemicals in plastics production. The aromatics plant has a capacity of 198,000 tonnes per year of benzene and 818,000 tonnes per year of paraxylene, while the polypropylene plant has the capacity to produce 350,000 tonnes of pellets a year.

The $4.5bn Liwa Plastics Industries Complex (LPIC), which has six core components based around an 800,000-tonne-per-annum steam cracker unit located at ORPIC’s Sohar refinery. The LPIC will be connected via a 300-km pipeline to a natural gas extraction plant at the Fahud oil field in the interior and will comprise a polypropylene plant, a high-density polyethylene unit and a linear low-density polyethylene unit, enabling Oman to produce these products for the first time, it will increase ORPIC’s plastics production by 1m tonnes per year, allowing for output of 1.4m tonnes of polyethylene and polypropylene.

Around $15bn has been allocated for petrochemical and infrastructure investment over the next 15 years, Duqm Refinery and Petrochemical Industries Company (DRPIC), a joint venture between ORPIC’s parent company Oman Oil Company (OOC) and Kuwait Petroleum International, is constructing a vast refinery complex that will form the cornerstone of the DSEZ.

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