The Sultanate of Oman has centuries of seafaring history. Its legacy of exploration, trading and commerce, not only in the Gulf of Oman and the subcontinent but also further afield to Africa and China, is well documented. Today, Oman continues that heritage, coupled with a focus on economic diversification towards growing non-oil sectors of the economy. In recent years, a key pillar in the Sultanate’s economic diversification strategy has seen the emergence of a thriving logistics sector, with SOHAR Port and Freezone at its core.
SOHAR Port and Freezone is rapidly becoming recognised as a major hub for industry and logistics, not only in the region, but also attracting attention on the global stage. The port’s position at the entrance of the Strait of Hormuz – one of the world’s busiest shipping lanes – makes it strategically vital for transhipment between East and West. Ultimately, SOHAR is a gateway for over 3.5 billion consumers across the Middle East.
The rise of Oman’s logistics sector is evidenced in the rapid rise of vessel movements and freight handled by SOHAR Port in 2017. Analysis highlights an increase in container traffic of 36%, compared to the previous year. Additionally, dry bulk throughput increased by 25% year-on-year, while vessel calls rose by a substantial 17%.
Over recent decades, Oman’s prosperity has led to rapid socio-economic growth and a steady rise in population. This has resulted in an increasing reliance on imported agricultural produce to serve the domestic market, both in volume and the varieties imported for local consumption. At present, over 60% of all foodstuffs sold in Oman are airfreighted or shipped from other nations.
In the last 10 years, Oman has aimed to develop its food, agriculture, and fisheries sector, which aligns with ongoing plans to increase levels of food security by boosting local production capacities and promoting economic diversification. The result of this is growth of 5.4% in the local agricultural sector in 2017, which is targeted to account for 3.1% of Oman’s GDP by 2020.
One of the major highlights for SOHAR Port in this respect has been the launch of a new 40-hectare food cluster, which will include a major flour mill, operated by Sohar Flour Mills; a world-class sugar refinery, owned and operated by the Oman Sugar Refinery Company; and a grain silo complex. The flour mill will have a capacity of 500 tonnes per day, while the planned sugar refinery will boast a production capacity of one million tonnes per annum. SOHAR currently operates a terminal entirely dedicated to the food cluster at the port.
Meanwhile, the SOHAR Port South expansion, which began in 2017, will add new deep-water berths and an additional 200 hectares of land to SOHAR’s present capacity of around 2,000 hectares. This expansion will be allocated almost exclusively for oil and gas-based investment, due to its proximity to the bustling petrochemicals cluster. Trescorp, a Singapore-based oil and petroleum products trading firm, is one of the first investors to benefit from this project.
Major milestones
SOHAR Freezone also observed several milestones in 2017. One of the key highlights was signing with India’s Pittie Group, which is one of the biggest cotton yarn manufacturers in the world. The $300m cotton project will produce 100,000 tonnes of cotton yarn per year and generate over 1,500 sustainable jobs in the free zone upon completion.
Other significant developments include: Oman Oil Refineries and Petroleum Industries (Orpic), which is expanding the refinery capacity at the port from 120,000 to 180,000 barrels per day, and Gulf Mining, which is involved in the construction of five ferrochrome smelters to increase metals output. The smelters will also complement and support iron and aluminium industries at SOHAR. The metals cluster at SOHAR is rapidly growing, with a potential for high economic yield.
A new addition to the SOHAR Port in 2018 is the country’s first bitumen refinery, which will reduce the reliance on bitumen and asphalt imports for road paving and industrial applications. The project will create new business opportunities and sustainable employment, generating 34 local jobs in the first phase of operations
SOHAR has always been committed towards protecting the environment and sustainable development. With its close ties to the Port of Rotterdam, which has over 600 years of experience, combined with their own research and development, SOHAR strives for environmental preservation across all aspects of port and Freezone operations. The fruitful partnership with the Port of Rotterdam also provides SOHAR with insight into best practices in the field of environmental protection and technological innovation.
SOHAR is characterising 2018 as the year of “Smarter Thinking”. According to this concept, the port encourages the sharing of innovative ideas to modernise and simplify operations, along with increased efficiency.
For instance, the steam produced by the oil refinery at SOHAR, a by-product of their operations, has significant energy potential. Researchers are looking at a potential pipeline to transfer steam to other industries, which can be used as a power source and reduce energy costs. The port is also conducting a study to convert its vehicles to run on hydrogen, which is another underutilised by-product, to reduce operating costs. Additionally, PV solar cells are also being installed around the head office.
SOHAR is one of the fastest-growing ports in the region and has proven itself to be a smart investment decision for operators located within the Freezone. Aside from the strategic location, the Freezone offers high levels of government support, easy-to-obtain project financing from local banks, 100% foreign ownership, and seamless connectivity to key global markets. SOHAR also features a unique capability – it is able to support the entire supply chain, right from production to delivery, in one easily accessible area. All of these features collectively make SOHAR an optimal location to set up a business. This in turn will make the port integral to Oman’s focus on developing the logistics and industry sectors in line with ongoing economic diversification efforts.
Charting its own course, SOHAR has emerged as one of the fastest-growing ports in the region and is steadily emerging as a leading logistics hub. It is at the forefront of technological developments and a forerunner in their respective applications, giving it an edge over its competitors in the region.
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