RIGHT IN THE MIDDLE

Oman 2014 | DUQM | REVIEW: DUQM

Duqm is looking to leverage its geographic centrality to become a major transshipment and manufacturing hub for the Gulf and beyond.

The Port of Duqm became operational in March 2013, and in its early phase is mainly serving as a port for heavy and outsized equipment used in both onshore and offshore oil and gas projects. Duqm represents a $15 billion to $18 billion piece of the grand state plan to diversify the economy away from oil and gas.

The spot on the Arabian Sea is slated to become a logistics center for upstream projects first, then downstream industries like refineries and petrochemicals, and also to serve as a gateway for tourism on the sandy beaches that stretch for miles, generally upwind from the industrial sites. Jobs in the new city and the surrounding Al Wusta region will fill a development gap between Salalah, near the Yemeni border, and Muscat, on the Gulf of Oman.

Mohammed Amin Bin Mustafa Al Saleh, CEO of Oman National Engineering and Investment Company (ONEIC), told TBY, “The government of Oman is developing the coastal area of Duqm into a fully integrated export center, complete with supporting urban facilities. Since we will be concentrating on oil and gas projects from 2013 onwards, various EPC projects in Duqm, like the Duqm refinery, a 500-MW power plant, and a desalination plant are in the pipeline for the next five years. Duqm is a strategic location as it connects Asia, Europe, and Africa."

Ahmed bin Hassan Al Dheeb, Undersecretary at the Ministry of Commerce and Industry, in October 2013 confirmed Oman's ambitious spending agenda and broke down the figures, as reported by Zawya news portal. The coming few years will see a combined $50 billion in public and private sector investment in large-scale projects. An estimated $20 billion will be devoted to transportation infrastructure, $17 billion to oil and gas projects, and $13 billion to manufacturing and industrial purposes.

Undersecretary Al Dheeb said that additional billions would be invested in tourism, logistics, and power and water projects. Transportation projects include the Oman National Railway, new airports—including Duqm—and airport expansions, as well as work on the Batina coastal road and connecting highways.

LEGALITIES & RATES

The Duqm Special Economic Zone Authority (SEZAD) is the legal authority for Duqm, running everything from investor roadshows to long-term strategy. Yahya Al Jabri, Chairman of SEZAD, told TBY, “Duqm's greatest advantage lies in its size; we will not face the problems that others face regarding expansion, because we have dedicated a huge area of land."

The port boundary is huge at 170 square kilometers and the logistics area, too, should be large enough for decades at 1,550 hectares. Duqm boasts a deep basin capable of handling vessels with drafts of up to 18 meters and its two dry docks, at over 400 meters each, are among the largest in the Gulf. Over 2 kilometers of commercial quays will expand to over 13 kilometers in Phase II of the development, but a 1-kilometer government quay will accommodate the Royal Navy, Coast Guard, and fast ferries.

Duqm has been granted all the legal basics, such as a dedicated free zone, duty-free status, and 100% foreign ownership permitted on long-term leases. Rates in industrial sites range from $2.50 to $5 per sqm per year, depending on visibility and access to main roads. SEZAD prices port leases in US dollars and city commercial leases in Omani currency—the latter range from OMR1.50 to OMR8 (about $4 to $21) per sqm per year.

The Port of Duqm Company (PDC), a 50-50 joint venture between Oman and the Consortium Antwerp Port, manages and operates the port and also is responsible for developing and managing the port's industrial area. PDC became a legal entity in August 2010.

Oman Drydock Company, ODC, is operated and managed by Korea's Daewoo Shipbuilding & Marine Engineering Company. ODC had its soft opening in April 2011 and started full operations in June 2012. The 2.8 kilometers of quays can accommodate 10 ships to be repaired at a time, including some of the largest tankers in the world, even ultra-large crude carriers (ULCCs) at capacities of up to 600,000 deadweight tonnage.

The dry dock complex includes hull processing, machining, painting, and pipe-fitting shops as well as a slop and sludge facility, and recycling and wastewater treatment plants. ODC plans to add a floating dock in future. Two mobile harbor cranes of 120-ton lifting capability enable Duqm to handle containers, bulk commodities, general cargoes, and heavy project cargoes.

Bunkering and related services such as pilotage are being offered now. First-rate information technology systems enhance efficiency and reduce operating costs. The second phase will greatly enlarge the basin to 6.5 square kilometers and 13.5 kilometers of commercial quays, and will boast a total of 44 berths.

PROVIDING THE BASICS

Duqm is still not much different from the sleepy fishing village it was, being a small town of some 13,000, but authorities expect the population to swell to 67,000 in the next decade. The first ones in are pioneers, but eventually people will want all the trappings of modern society.

Ibrahim Sultan Al Hosni, Deputy CEO of the Duqm Development Company (DDC), told TBY that it's important to provide the basic amenities to attract international staff to Duqm: “Most importantly staff have children and they need a good school in the city so they can be close to them. Phase II, for example, in addition to the residential units, will have an international school, a hypermarket, and a mall."

A reverse osmosis water desalination plant, already built, can supply up to 6,000 cubic meters per day, enough potable water for a population of 35,000. The plant will be expanded when necessary and Duqm also is building two reservoirs, with a third on the drawing boards.

A temporary diesel power station has a total installed capacity of 67 MW and distributes power throughout Duqm via an underground cable network. Seven substations serve the port, airport, city districts, light industry, and hotel areas.

A larger gas-fuelled power plant of 500 MW will meet Duqm's needs in future. The gas is to be supplied via a 36-inch pipeline from Saih Nihayda in central Oman. Indeed, the 85 kilometers of pipe for the Oman Gas Company was among the first major cargos to be delivered through Duqm in 2013.

The expected gas supply will also power the new oil refinery, with a planned capacity of 250,000 barrels per day (bbl/d), as well as other industry, possibly even a cement plant. Oman Cement CEO Jamal Shamis Al Hooti told TBY, “Sohar doesn't have enough limestone reserves, and, therefore, right now Duqm is the best option. Also, Duqm will have natural gas available soon, which would supply the fuel required for the operation of plant. Furthermore, the establishment of a cement factory in Duqm would facilitate easy availability of cement for speedy construction activities in the area, where they are currently having difficulties in procuring cement."

Masirah Oil is set to begin exploratory drilling in its offshore Block 50 concession, too, and ships delivering project cargoes and oilfield equipment have increased the number of vessels hitting Duqm by 30% since the start of early operations, according to the port operator.

TRANSPORT LINKS

Five international consortiums submitted technical proposals to manage construction of the OMR6 billion ($15.6 billion) national railway project in August 2013. The first phase of the project includes a 486-kilometer line from Muscat to Duqm Port as well as a 242-kilometer section from Sohar Port to Al Misfah in Muscat and a link to Muscat Central Station.

The Duqm International Airport is nearly completed and will be able to handle 500,000 travellers per year. Its cargo terminal will open with a 50,000-ton capacity. The airport will connect Duqm to Muscat and other regional airports within Oman as well as some international destinations.