STOP-OFF POINT

Oman 2014 | INDUSTRY & MINING | VIP INTERVIEW

TBY talks to Peter Broers, CEO of the Port of Duqm Company, on the development of the port and prospects for the Duqm region.

How is the Port of Duqm Company (PDC) structured?

For the Port of Duqm, as with most of the big projects in Oman, the government decided to team up with an established player in the industry with a proven track record. A similar approach was made for the Port of Sohar, for which the Port of Rotterdam, in the Netherlands, was selected and for the Port of Salalah, APMT, with its HQ in the Netherlands, is participating. The Port of Antwerp, in Belgium, was invited by the Omani government to participate in the management of the Port of Duqm. Duqm has the additional advantage of being a special economic zone (SEZ), with its own independent body called the Special Economic Zone Authority of Duqm (SEZAD). This Authority regulates the complete economic zone of Duqm and acts independently in issuing commercial and environmental permits. SEZAD communicates directly with the concerned ministries in Muscat and acts as a single window for its internal stakeholders. It creates a more direct problem-solving mechanism, which is favorable for business. There are, of course, other attractive aspects to the zone, as there are unique regulations regarding imports and exports, and it is possible to do business here as a 100% foreign-owned company. The umbrella of SEZAD covers all projects in the area, and the Port of Duqm is a key project in this economic zone next to the industrial zone, airport, and tourism development projects. Today, a lot of our efforts go toward assisting the design, where we cooperate with the design team and contractors appointed by the involved ministry. We strive for the most up-to-date technology and design for the port.

How important is it that the Duqm project was started from scratch?

I think it is a key aspect for future success. From the start you can put the right direction forward. For example, the marine works have been designed and executed to accommodate the largest vessels up to a draft of 18 meters. Also, both dry docks are some of the biggest in the region and are more than 400 meters long. The total port boundary is 170 square kilometers and the area for logistics covers 1,550 hectares. Each time we make a decision we have to keep one eye on the requirements of the future. We want to make the port as modern as possible, and the fact that we started from scratch has allowed us to anticipate future needs. Because of this, the long lifespan of our port will be guaranteed.

“Our main focus today is on the oil and gas fields in the center of Oman, which are very close to the Port of Duqm."

Is the building of the infrastructure your responsibility?

No, we are an end user. We will receive the assets when everything is finished. Until completion, everything is under the control of the Ministry of Transport and Communication (MOTC) and SEZAD. They do the project management and the financial follow up. The PDC, as an end user, gives the required operational feedback so the design and construction will be perfect for later use.

To what extent will you be involved in the operations in the port when it is complete?

Our approach is the “landlord" model, similar to the models used in the ports of Antwerp and Rotterdam and what was used to create the Port of Sohar here in Oman. This model is based on the principle that the different terminals are operated by dedicated companies that are experts in their fields of operations, whether it is general cargo, dry-bulk, liquids, or containers. The port authority takes care of the maritime access and services needed by the shipping lines calling at the port (waterside services) and managing the terminal concessions (landside services). If the port authority is also engaged in operating the different terminals inside the port, then this can become an issue in a bigger port as Duqm will be, as there is no competition available. The shipping lines have no alternative and can only choose the port authority to serve them. Then there is no incentive to improve service levels and the port will not function optimally. Ideally, we would like to see competition inside the port accommodating different terminal operators.

How will the port complement the existing maritime facilities in Oman?

Our main focus today is on the oil and gas fields in the center of Oman, which are very close to the Port of Duqm. A lot of new projects are going on there and all of them need big equipment to come in. These dedicated project cargoes are mostly oversized parcels that are difficult to bring in by the other ports of Oman because of height restrictions and longer road connections. Duqm is ideal to act as the port of entry for these project cargoes. This first step—we call it Early Operations—has started and is generating the first business in the Duqm area, and this is happening even before works on pavements, roads, technical buildings, and fencing have been finished. The second stage will focus on the development of industrial activities in Duqm. These activities will focus on the downstream of the oil refinery coming to the area and the processing of the available minerals in the region. This requires terminals inside the port that are handling dry-bulk, liquids, and general cargo, including container handling. Today, the design and tendering process for these contractor works is in progress. The Early Operations on the port are already creating jobs in the area.

How important will the refinery be when it comes online in 2017?

It will be crucial as the refinery will create business for the port. On the one hand, the import and export of petroleum products will create traffic for the port. On the other hand, it will create on the land side the possibility for downstream industries utilizing the products coming out of the refinery and manufacturing different kinds of plastic pellets that will then attract companies that are extruding these pellets into finished products for car parts and household items.

When do you expect the port to be running at full capacity?

A port is never finished. If you look at the Port of Antwerp, it has been developing for 500 years, dock-by-dock, step-by-step. It is still growing and upgrading its infrastructure for present and future requirements. Out of the first package, the marine works that include both breakwaters, dredging the approach channel, the first port basin, and the construction of the commercial quay walls have been finished. Parallel to these works, both dry docks have been built and are now operated by the Oman Drydock Company (ODC). The roads of this first package are now being constructed. The packages that take care of the pavement on the commercial quay wall, the technical buildings, and the entrance gate complex with its fencing are now under design. Once they are constructed, the commercial quay, which is 2.4-kilometers long, will accommodate a general cargo terminal, two container terminals, and one dry-bulk terminal. The construction should be finished in 2016. To accommodate the in- and out-flows of the refinery coming to Duqm, the development of liquids jetties, which will be on the other side of the port, has to be carried out. This package has to come into operation by 2017. As you see, it will be a never-ending story.

What opportunities does Duqm represent to open new markets and shipping routes?

Oman is at the crossroads of Europe and Asia. It is well situated for trade from India, Europe, Africa, and the Middle East. We hope that the construction of Duqm Port will lead to the establishment of local Omani companies operating some terminals, perhaps expanding to another port in the country and then, maybe, going international and operating a terminal elsewhere in the Gulf. It is a step-by-step process. History shows us that Oman has clearly played an important role in international trade, from Zanzibar to the Gulf. The logic is that once Duqm's infrastructure is in place, it can play a part in this international trade. Oman's two largest ports, Sohar and Salalah, are proof that it will be a success. The location of Oman is our best asset.

Corrections were made to this article on the afternoon of April 22, following a version that was sent to subscribers on the morning of the same day. This interview will be published in 'The Business Year: Oman 2014'.

© The Business Year - April 2013