Oman’s Sohar Port and Free zone (Sohar) is well on track for more success in the years ahead as planning commences to develop and expand its operations over the next five years. 

As one of the region’s prime logistical hubs, Sohar hopes to play a critical role in catapulting the Sultanate into the top 10 of the world’s most logistics-friendly economies by 2040 and envisages developing the Freezone as a hub for innovation, especially in the logistics sector. 

“I believe that in 10 years, you will see the regional logistics industry really starting to become a key driver for the Sultanate of Oman’s future prosperity, with many young Omanis entering the industry and building their future careers,” said Mark Geilenkirchen, chief executive officer, Sohar Port and Freezone.
Towards this, Sohar Port and Freezone, which is managed as a 50:50 joint venture between the Port of Rotterdam and the Sultanate of Oman, is currently working on a number of activities centered around four main pillars, namely: logistics; metals; petrochemicals and food, he said.

While work is progressing fast on the construction of a $170 million state-of-the-art Food Zone, on the logistics front, there is a great deal going on at Sohar.  “We have several new direct calls at the Port; a new and automated container terminal; new bonded warehouse facilities in the freezone; new highways opening, including a new direct connection to Saudi Arabia expected to be opened very soon, which will cut 800 km off the journey to Riyadh; and we are starting to develop our freezone as a hub for innovation in the logistics sector,” Geilenkirchen said.

FOCUS ON FOOD ZONE

Sohar’s new Food Zone will feature a dedicated agro terminal, a flour mill, and Oman’s first sugar refinery, which will largely eliminate the Sultanate’s current need to import over 120,000 tonnes of refined sugar a year. “The combination Sohar will soon be able to offer of available foodstuffs, affordable energy, abundant feedstock for packaging, and world-class logistics should be a big draw for international food companies looking for the perfect regional base in the Middle East,” he said.

The Sohar Food Cluster Company (SFCC) has already signed a lease agreement for a 10-hectare plot, through which the UAE’s Essa Al Ghurair Investment will create the basic infrastructure to attract international investors to launch various food-related industries at Sohar. There are also many other opportunities in associated areas such as cold storage, warehousing and investments all the way along the supply chain. Heavy investments in non-oil businesses have resulted in a constant flow of new projects in these sectors, which in turn drives demand for logistics and transportation services across the region, he added. 

Geilenkirchen: driving Oman’s logistics industry

NEW CONTAINER TERMINAL

A new container terminal at Sohar Port which will increase its container-handling capacity four-fold, from two million to six million twenty-foot equivalent units (TEUs) every year is being planned. According to Geilenkirchen, planning and site-preparation work is progressing on Terminal D, a massive new container terminal coming up in Sohar that will boast a 1.2 km long jetty once commissioned. 

“All our terminals are planning for growth,” quips Geilenkirchen. 

Oiltanking Odfjell, its global partner that operates its liquid and gas terminal, is undergoing a major project to upgrade its marine and landside infrastructure, as it sets its sights on capturing a bigger share of the market, whilst also improving its efficiency by further reducing turnaround times. Likewise, C Steinweg , which operates its terminal for general cargo, has made some significant new additions to its terminal equipment and now handles in excess of 200,000 vehicles annually, many destined for finishing centres in our own Freezone, he said. 

ROBUST GROWTH

Sohar Port has witnessed double-digit growth every year for the past 10 years. The year 2015 was a record year for Sohar following the relocation of all commercial shipping from Muscat port, in Oman’s capital, to Sohar in 2014. In 2015, it handled close to one million tonnes of cargo each week for the first time, 12 per cent more than in 2014. 

The closure of Port Sultan Qaboos in the capital Muscat, in 2014, helped to consolidate volumes in Sohar and achieve economies of scale, resulting in a 62 per cent increase in container traffic in 2015 over 2014. 

“And for 2016, we are on track for more growth,” said Geilenkirchen. According to him, container volume grew again considerably in the first-half of 2016, up by 18.6 per cent from the same period in 2015.

Fuelled by significant infrastructure investments in the country, break bulk cargo also grew significantly in the first half of 2016, up by over 43 per cent in comparison to 2015; increasing from over 850,000 tonnes in the first-half of 2015, to well over 1.2 million tonnes in the first half of 2016. 

Liquid bulk also performed well, with an increase of over 15 per cent in the first half of 2016 compared to the same period in 2015, up by well over one million tonnes to 9.99 million tonnes. Overall, vessel movements at the Port increased by nearly 6 per cent compared to the first-half of 2015, with over 1,300 ships calling at Sohar between January and June 2016. 

STRATEGIC LOCATION

Oman is continuing to take full advantage of its favourable geographic position by investing heavily in infrastructure, and Sohar Port and Freezone is one of its prime locations, as the main gateway to the markets of the Gulf, as well as Iran, India and east Africa.

“As Iran gradually reintegrates itself into the global economy, we see a significant upside potential for our business, as Sohar can become the stepping-stone for Iranian companies seeking to penetrate new African, Asian and Arab markets,” said Geilenkirchen. 

“Recent agreements to create a trade corridor stretching from Turkmenistan, Uzbekistan and Kazakhstan in the north, through Iran to Oman and India, will further enhance ties between Oman and Iran; and the establishment of an undersea gas pipeline will also enable us to deepen energy relations via Iran with gas-rich Central Asia,” he said. 

Investment levels this year crossed the $25 billion mark at Sohar, which Geilenkirchen said is “more than the GDP of some smaller European countries, and that ranks us as one of the world’s fastest growing port and freezone developments,” he said.

While he did not disclose financials for the future, all he said was that there are some very significant investments in the pipeline. One of the biggest is the Liwa Plastics Industries Complex, a transformational project that will improve Orpic’s product mix and business model, double its profit and will support the development of a downstream plastics industry in Oman. 

Taking advantage of the growing global market for plastics, it will create many new business opportunities at Sohar and will firmly reinforce Orpic as a significant player in the international petrochemicals marketplace. Construction started recently, with an expected overall project cost of $6.4 billion, making it the largest project ever to be financed in the Oman downstream oil and gas sector.