In an ex­clu­sive in­ter­view with Reggy Ver­meulen, CEO, Port of Duqm

In an ex­clu­sive in­ter­view with OGR, Reggy Ver­meulen, CEO, shares his thoughts on the ma­jor mile­stone achieve­ments and the po­ten­tial ar­eas of growth for the Port of Duqm

Oil and Gas - - CONTENT -

Duqm, lo­cated in Oman’s Al Wusta coast, is cur­rently wit­ness­ing one of the most am­bi­tious in­fra­struc­ture de­vel­op­ments to have ever taken place in the Sul­tanate. An in­te­gral part of Oman’s eco­nomic di­ver­si­fi­ca­tion strat­egy, the re­gion is be­ing kit­ted out to at­tract for­eign in­vestors and emerge as Oman’s ma­jor lo­gis­tics and in­dus­trial hub.

With the land area of 2,000 square kilo­me­tres, The Spe­cial Eco­nomic Zone at Duqm is the largest in the Mid­dle East, as well one of the largest in the world. It is an in­te­grated de­vel­op­ment com­pris­ing about eight zones in­clud­ing in­dus­trial zone, fish­eries zone, sea­port and dry­dock, res­i­den­tial zone, cen­tral busi­ness district, tourism and recre­ational zone, lo­gis­tic hub and ed­u­ca­tional and train­ing zone.

The Port of Duqm, which started its soft op­er­a­tions in 2012 has grown ex­po­nen­tially dur­ing the last cou­ple of years and is one of the key driv­ers of the di­ver­si­fi­ca­tion strat­egy. The first phase of the port is said to be com­pleted by 2020 and will in­clude a mul­ti­pur­pose ter­mi­nal, dry bulk ter­mi­nal and early op­er­a­tions con­tainer ter­mi­nal, all of which are in­dis­pens­able to port op­er­a­tions. In ad­di­tion, the con­struc­tion of the head of­fice and gate com­plexes with fa­cil­i­ties for ROP in­spec­tion, cus­toms and the Min­istry of Health are in full swing. This will be fol­lowed by con­struc­tion of phase two, which would be com­pleted be­tween 2025 and 2030.

HIGH­LIGHTS OF 2017

Reggy Ver­meulen, Chief Ex­ec­u­tive Of­fi­cer, Port of Duqm says, “We started op­er­a­tions at the port in 2012 on a very low scale. But there has been a steady growth over the years. The port posted a sub­stan­tial growth in 2016 and we con­tin­ued on that streak in 2017 as well.”

Last year, the port achieved some note­wor­thy milestones. “In 2017, Duqm

Be­ing listed on the CMA CGM as well as MSC net­work al­lows the Port of Duqm and its clients to be con­nected to the rest of the world in a seam­less man­ner. They are among the first ship­ping lines to put Port of Duqm in its reg­is­ter as an end des­ti­na­tion and we ex­pect many other lines to fol­low soon

was listed as one of the reg­is­tered des­ti­na­tions by French ship­ping gi­ant CMA CGM,” says Ver­meulen. “We re­ceived the first con­tain­ers from CMA CGM in July 2017 via the Oman ex­press ser­vice op­er­ated by Oman Ship­ping Co through its sub­sidiary Oman Con­tainer Line.” The con­tain­ers were loaded with project equip­ment for Se­bacic Oman, which is pre­dicted to be­come the world’s largest Se­bacic acid plant.

This was closely fol­lowed by the ar­rival of MSC Mediter­ranean Ship­ping Com­pany con­tain­ers at the port in Au­gust. The con­tain­ers were car­ried by the MSC Lau­rence from An­twerp to Jebel Ali, picked up by an Oman Con­tainer Line feeder ser­vice, and dis­charged at the Port of Duqm on 5th Au­gust. The cargo in­cluded equip­ment for Serka Taah­hut In­saat – the con­struc­tion unit of Turk­ish con­glom­er­ate Adali Hold­ing – and will be used to help de­velop the in­fra­struc­ture of the com­mer­cial quay.

“Be­ing listed on the CMA CGM as well as MSC net­work al­lows the Port of Duqm and it’s clients to be con­nected to the rest of the world in a seam­less man­ner. They are among the first ship­ping lines to put Port of Duqm in their reg­is­ter as an end des­ti­na­tion and we ex­pect many other lines to fol­low soon. This will en­hance the com­pet­i­tive­ness of the port and we ex­pect vol­umes traded through Duqm to grow sub­stan­tially over time,” says Ver­meulen.

“An­other ma­jor mile­stone is the fact that we have in­ten­si­fied the de­liv­ery of bunker fuel with our part­ner Oman Oil Mar­ket­ing Com­pany. Oman Oil has been col­lab­o­rat­ing with us since 2012 to pro­vide heavy fuel oil and ma­rine diesel oil, as well as ma­rine lu­bri­cants to ships call­ing at the port and sur­round­ing wa­ters. How­ever, in 2017 we have fur­ther in­ten­si­fied this de­liv­ery to en­sure that we bet­ter serve the con­tin­u­ous flow of both com­mer­cial and cargo ves­sels com­ing to our port.”

“We have also in­ten­si­fied the ex­port of min­er­als via the Port of Duqm,” con­tin­ues Ver­meulen. “In re­cent months, dolomite and lime­stone have been sent out on a reg­u­lar ba­sis from the mines in the vicin­ity of the port. This adds a new rev­enue stream not only for the re­gion but also the coun­try.” The port saw the first ship­ment of lime­stone from its com­mer­cial quay in May 2017 when a ship laden with 55,000 met­ric tonnes (MT) of lime­stone left for In­dia. The min­eral com­mod­ity was mined and ex­ported by Desert En­ter­prises Trad­ing & Con­tract­ing from a lime­stone quarry lo­cated about 40 km from the port. Proven lime­stone re­serves at the quarry are es­ti­mated at over 200 mil­lion tonnes.

Apart from dolomite and lime­stone, other im­por­tant de­posits have also been found in the vicin­ity of Duqm, such as gyp­sum, sil­ica sand and clay. These prod­ucts are ex­pected not only to be ex­ported from the port, but also feed im­por­tant down­stream in­dus­tries fully tak­ing ad­van­tage of Duqm’s prime lo­ca­tion in the vicin­ity of ma­jor ship­ping lanes and di­rect main line con­nec­tiv­ity to its ma­jor ex­port des­ti­na­tions.

“An­other key point that I would like to high­light is the fact that we are now mov­ing from sup­port­ing the oil and gas in­dus­try via the project point of view to the op­er­a­tional point of view. The prime ex­am­ple of this would be when Port of Duqm re­ceived the first con­sign­ment of OCTG (oil coun­try tubu­lar goods) pipes for Pe­tro­leum De­vel­op­ment Oman (PDO).”

A first lot of 4,900 tonnes from Nip­pon Steel and Su­mit­omo Metal Cor­po­ra­tion was dis­charged at the port’s com­mer­cial quay in Novem­ber 2017. This marked the next phase of

Su­mit­omo Cor­po­ra­tion Tubu­lar So­lu­tions Oman’s (SCTSO) suc­cess­ful de­liv­ery of sup­ply chain man­age­ment (SCM) ser­vices to PDO, fol­low­ing a ‘Mill to Well’ model for the first time in the Sul­tanate. It is ex­pected that the Port of Duqm will han­dle 4-5 sim­i­lar ship­ments per month from now on as the project move to Duqm nears com­ple­tion. “This is fol­lowed by some ma­jor oil com­pa­nies which have started to use the port for their op­er­a­tion cargo, like the de­liv­ery of chem­i­cals, valves, etc.”

PAVING THE WAY FOR ECO­NOMIC DI­VER­SI­FI­CA­TION

“We are fully in­te­grated to the gov­ern­ment‘s vi­sion of eco­nomic di­ver­si­fi­ca­tion and are an es­sen­tial com­po­nent of its lo­gis­tics strat­egy like the other two ports,” ex­plains Ver­meulen.

“The Al Wusta re­gion is very rich in min­er­als and oil and gas. But the re­gion does not have a proper lo­gis­tics hub cater­ing to its eco­nomic po­ten­tial. There­fore, our pri­mary role is to de­velop a lo­gis­tics hub to com­ple­ment the eco­nomic de­vel­op­ment in the re­gion. You can­not sus­tain a man­u­fac­tur­ing hub with­out hav­ing the means to im­port the raw ma­te­ri­als and ex­port the fin­ished prod­ucts.

“In ad­di­tion, on a na­tional level, we are look­ing to iden­tify the lo­gis­tics re­quire­ments of Oman that are not cur­rently be­ing met by two other ma­jor ports - So­har and Salalah. We can cater to these new re­quire­ments, as we are the lat­est en­trant and are still be­ing con­structed so that a lot of things can still be bent and a lot of new things can be built. We have iden­ti­fied some niche mar­ket lo­gis­tics re­quire­ments, which are not present in Oman. The whole

idea is to gen­er­ate busi­nesses that are not avail­able in Salalah nor in So­har but are there in our neigh­bor­ing coun­tries.”

MEET­ING CHAL­LENGES HEAD-ON

“Where there are chal­lenges, there are also op­por­tu­ni­ties,” main­tains Ver­meulen. “And one of our key chal­lenges is that we want to main­tain the high­est pos­si­ble Oman­i­sa­tion lev­els at the Port of Duqm. We re­alise that we will need to pro­vide a lot of train­ing for the young Oma­nis who join us. And to be able to re­cruit and train per­son­nel into the port busi­ness will cer­tainly pose a chal­lenge. How­ever, hav­ing said that we have al­ready started putting sys­tems in place to meet our tar­gets.”

LOOK­ING FOR­WARD TO 2018

“2018 will be an im­por­tant and crit­i­cal year in the sense that we have to con­tinue to build up on the suc­cess of 2017,” says Ver­meulen. “One of the ways in which we are plan­ning to do this is by in­creas­ing the through­put vol­ume and ex­pand our client base. But more im­por­tantly, we are try­ing to fi­nalise the con­struc­tion of the port. The con­tainer ter­mi­nal will be com­mis­sioned in early 2020 and cur­rently the port is op­er­at­ing on an early con­tainer ter­mi­nal. Our ca­pac­ity is 200,000 con­tain­ers a year which is rather lim­ited com­pared to the fi­nal pro­jected ca­pac­ity. The year 2018 will be quite sig­nif­i­cant as we will start re­ceiv­ing the first part of the fi­nalised port while still un­der op­er­a­tion.”

Ver­meulen is also look­ing for­ward to the fi­nalised con­struc­tion of the head­quar­ters which is ex­pected to be com­plete by 2019. This will al­low fur­ther ef­fi­cien­cies of process and en­able them to grow in size.

In terms of project de­liv­ery and fu­ture growth, Ver­meulen is con­fi­dent that Duqm will suc­cess­fully kick­off within the en­vis­aged time­frame. “A mega project of Duqm’s stature will take time. Ports like So­har or Jebel Ali were not built in five years. So Duqm will also grow steadily. But I am con­fi­dent that the gov­ern­ment of Oman is putting in place the right in­gre­di­ents to build its new eco­nomic and lo­gis­tics hub. There are a lot of po­ten­tial that are not fully tapped in Duqm and they are go­ing to be utilised in the fu­ture such as po­lit­i­cal and eco­nomic sta­bil­ity of Oman, the prox­im­ity to African mar­ket etc. These el­e­ments are key for the in­vestors. So as the ma­chine starts to roll, we need to pro­mote our­selves, in­crease our vis­i­bil­ity and win the cred­i­bil­ity of more in­vestors.”

The Al Wusta re­gion is very rich in min­er­als and oil and gas. But the re­gion does not have a proper lo­gis­tics hub cater­ing to its eco­nomic po­ten­tial. There­fore our pri­mary role is to de­velop a lo­gis­tics hub to com­ple­ment the eco­nomic de­vel­op­ment in the re­gion

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