Oman-south Korea relations set to grow

THE bilateral relations between the Sultanate of Oman and Republic of Korea are deep rooted and date back to the establishment of their diplomatic relations way back in 1974. Since then both countries have been maintaining friendly and close ties that saw the opening of the Embassy of the Republic of Korea in Muscat in 1976 while the Omani Embassy in Seoul was set up in 1984.

There have been tremendous efforts to fortify the bilateral diplomatic relations between the two countries over the years. On the political front, the two countries have exchanged high level visits. In 2010, Korea's Minister of Defence and Minister of Patriots and Veterans Affairs visited Oman while Oman's Minister of National Economy and Minister of Environment and Climate Affairs visited Korea. Another important milestone is the year 2005 when the two countries exchanged high level visits by Sayyid Fahd bin Mahmood al Said, Deputy Prime Minster of the Sultanate and Lee Hae-chan, Prime Minister of the Republic of Korea.

Recently, The Cheonghae Unit, Korean element of the international anti-piracy naval task force, has made regular visits to the ports of Oman. “We, at the South Korean Embassy would like to take this opportunity to express its deepest gratitude to the Omani government for co-operation and assistance provided by the Sultanate of Oman during and after the rescue operation conducted by the Cheonghae Unit to free Korean cargo ship Samho Jewelry from Somali pirates in the Arabian Sea last January”, South Korean Ambassador Choe Jong-hyun told the Observer.

The ties between the two countries have particularly witnessed rapid development in the economic field. Since the early 80s, a number of Korean companies have actively participated in major construction projects in Muscat, Salalah, Sohar, Barka etc. At the same time, Oman has been exporting a large quantity of LNG (liquefied natural gas) and crude oil to Korea.

The most important milestone was in 1996 when Oman LNG and Korea Gas Corp (Kogas) signed a 25-year sales and purchase agreement for the supply of 406 million tonnes/year of LNG to Korea. By this contract, Kogas has been the largest buyer of Oman LNG.

The bilateral economic and industrial relations received a shot in

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the arm when the Korean Hyundai Engineering Co Ltd was selected to be the prime contractor for the implementation of the $600m hydrocarbon project recently opened in Bukha in the Musandam Governorate. The sole financier is the Oman Oil Company Exploration and Production (OOCEP), the upstream subsidiary of the government owned energy investment firm Oman Oil Company. The project, part of a sizable integrated development centring on the offshore West Bukha field, has the potential to spur economic growth in this strategically important Omani enclave overlooking the Strait of Hormuz.

“Gas volumes produced by the facility will not only provide energy feedstock for the governorate’s first gas-based Independent Power Project, but also potentially spur investments in industrial projects as well”, Sang-rok Sung, Senior Executive Vice-president, Hyundai said, adding: “Additionally, the venture will also help establish a new oil export terminal on the Sultanate’s north coast”.

With the Engineering-procurement-construction (EPC) of the project acquired in last December, Hyundai is in the process of employing around 2,000 workers at the peak of construction. There is an agreement between Oman and Korea on avoidance of double taxation. It was signed in 2005 and went effective next year.

A number of important projects are currently being undertaken. The Duqm ship repair yard, which will begin its soft operation soon, has been built by Daewoo Construction. Its management is also assisted by DSME which has a ten-year O&M contract with Oman Drydock Company (ODC), a government-owned company in-charge of the project. Hanjin Heavy Industries and Construction is participating in the second phase of construction of Al Duqm International Airport. GS Construction, together with Siemens, takes part in IPP projects of Barka 3 and Sohar 2, each with a planned generation capacity of 744MW. In Seeb, a wastewa- ter project is being implemented by Hyundai Rotem. The road between Salalah and Thumrait is expanded by Sambu Construction. Additionally, Korean companies such as DSME and GS Caltex have provided various technical training for a number of Omani staff as part of their operational support for ODC and Sohar Refinery respectively.

At the end of 2010, Korea’s investment towards Oman stands at $409m according to the statistics of Korean EXIM Bank. Oman Oil Company (OOC) owns 30per cent stake of GS Electric Power and Services (GS EPS) and also co-invested with the company in the construction of LNGfired power plants in Korea.

Korea has a number of companies which have competitive edge in renewable energy projects. Moreover, they are also much interested in entering foreign markets and offering technical co-operation. Korean company DSME is already participating in setting up of a solar pilot project at Al Mazyunah. “Given Oman’s strong potential to develop renewable energy such as solar power, we look forward to more opportunities for co-operation between Korean and Omani companies in this field”.

The products and service that the Sultanate of Oman exports to Korea include natural gas (71.5 per cent, $2,813m), crude oil (20.5 per cent, $842m) and aluminium (5.2 per cent, $215m). The total amount of import in 2010 is $4,095m.

Korea’s major export items include automobiles (51.6 per cent, $343m), electric wires (7.5 per cent, $50m), steel plates (5.0 per cent, $33m) and petrochemical products (3.5 per cent, $23) and construction equipment (2.8 per cent, $18m). The total amount of export in 2010 is $664m. Other items that Oman imports include wireless communication devices, various steel products, synthetic fibers, motors and automobile parts.

There are various partnerships between Korean companies and their Omani counterparts, particularly in the field of construction. For instance, DSME and Omran are jointly developing a residential area and tourism town in Duqm by establishing a joint-venture Duqm Development Company (DDC) in April 2010. DDC has recently embarked on its first project which is building accommodation for the staff of ODC. “Additionally, I think Oman has much to offer in terms of tourism, especially if you compare the Sultanate with other Gulf countries. In Oman, there are stunning landscapes which has a strong po- tential to attract a number of Korean tourists. I also believe that Korea is an attractive and interesting place for Omani tourists”, the ambassador further said.

It would be helpful to raise awareness of how much Korea and Oman can benefit each other by encouraging more meetings and exchanges between the two countries. Last year, Korea-oman Joint Business Council was established for this purpose and I hope this important channel will be fully utilised.