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

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