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Sohar: ambitious plans

Sohar: ambitious plans



Sohar at Oman’s core

Sohar port and Freezone is moving forward to becoming the logistics hub of choice for the region, while aligning its goals with the Sultanate’s economic diversification efforts

June 2018

Like all major Gulf countries, transforming economy by boosting investment into industrial sector and developing infrastructure is high on Oman’s agenda too.

Spearheading the Sultanate’s progress with economic diversification is Sohar Port and Free Zone (Sohar), which has much to boast about in terms of milestones achieved in 2017 and is now well on track for more success in the years ahead as it continues to expand its operations and grow its industrial capability.

“We are witnessing many exciting developments within the port and freezone, including the introduction of the new Food Cluster and Sohar Port South expansion,” said Mark Geilenkirchen, CEO, Sohar Port and Freezone while speaking to Gulf Industry.

“Oman’s progress with economic diversification, coupled with its geographical location, stable political climate, and infrastructure, have all contributed towards the Sultanate’s growth within the regional logistics sector in recent years, with Sohar at its core,” he added.

Sohar Port: solid growth

Sohar Port: solid growth

With current investments of $26 billion, it claims to be one of the world’s fastest growing port and free zone developments in the world.  Given its ideal location at the entrance at the Strait of Hormuz, which is one of the busiest shipping lanes in the world, Sohar Port and Freezone has emerged as a crucial point of entry into the Gulf and for transhipments between the East and West.

“Sohar is rapidly becoming a major industrial and logistics centre for the region, and the global market,” Geilenkirchen said.

 

SOLID GROWTH

For Sohar Port, 2017 was a year of solid growth. Having averaged over one million tonnes of cargo handled per week, Sohar saw container traffic rise by 37 per cent, dry bulk volumes by 25 per cent year-on-year, and had 3,075 vessel calls, which indicated a considerable increase of 17 per cent year-on-year.

Furthermore, a steady growth in aggregate cargo volumes and continued investment, which includes the upcoming port Sohar Port South expansion, will provide additional cargo capacity and plays an integral role in boosting businesses at the port, said Geilenkirchen.

“Another factor for this increase in growth was the introduction of the food cluster, which secured significant public and private sector investments. Focusing on this cluster, which includes innovative methods of food storage, production and distribution, has allowed us to attract a large portion of the agricultural cargo trade in the region,” he pointed out.

Geilenkirchen: aggressive expansion

Geilenkirchen: aggressive expansion

Also set to be complete in this year, is its agro bulk terminal and food cluster, complete with a berth at Sohar Port dedicated solely for food and agriculture products.

“We expect the establishment of the food cluster, together with other industries and companies at the port and the upcoming Sohar Port South expansion, to feed several downstream industries within the free zone. Further complementing these developments will be the new bunkering facilities, which will be introduced later this year. Each of these projects moves us forward to becoming the logistics hub of choice for the region, while at the same time aligning our goals with those of the country’s continued economic diversification efforts,” he said.

 

FOCUS ON FOOD CLUSTER

The Food Cluster is an important component in Oman’s long-term food security strategy and a key focus of its long term objectives. This food cluster will include a sugar refinery under the private ownership of the Oman Sugar Refinery Company, and a governmental strategic food reserve facility controlled by the Public Authority for Stores and Food Reserve; and a state-of-the-art OR15 million ($39 million) flour mill and grain storage silos, which is owned and operated by Sohar Flour Mills and is expected to become operational by Q3 2018. Sohar Four Mills has also leased a 10-hectare plot within the Port area for the construction and management of 12 grain storage silos, each boasting a storage capacity of 13,000 tonnes.

In its first phase, the facility will have a wheat milling capacity of 550 metric tonnes per day with a potential to expand to 2000 metric tonnes per day in later phases. The mill will also be capable of producing all types of specialty flours to cater to the different regions of Oman as well as developing exports to the GCC and other international markets, Geilenkirchen revealed.

“Through the formation of the food cluster and alongside other industries and companies at the port and the upcoming Sohar Port South expansion, we foresee the expansion of business within the free zone,” he added.

New bunkering facilities will be introduced later this year, which will further supplement the growth and development at Sohar. “Each of these projects creates a milestone in assisting us achieve our long-term objective of becoming the logistics hub of choice within region. Simultaneously, it will align Sohar’s goals with that of the Sultanate to facilitate continued economic diversification efforts,” Geilenkirchen said.

The biggest investment that is currently underway at the port is from the state-owned Oman Oil Refineries & Petroleum Industries (Orpic), which is building the $6.5 billion Liwa Plastics Industries Complex (LPIC) project. The project is well into the construction phase and is the largest of the three strategic growth projects undertaken by Orpic to fulfil its vision of building an Omani integrated refining and petrochemical business. “When completed in 2020, the project is set to transform Orpic’s product mix and business model, create new business opportunities for the downstream plastics industry in Oman, and new careers for citizens,” he added.

 

SOHAR PORT SOUTH BECKONS

All eyes, for now, are on Sohar’s new reclamation project – Sohar Port South, which is shaping up well to help boosting business. “Our primary focus for the future, is the Sohar Port South expansion and the continued development of our food cluster,” said Geilenkirchen.

The South expansion, dubbed Sohar Port South, envisages the dredging and reclamation of a waterfront area on the southern boundaries of the hub and will increase Sohar’s present capacity of around 2,000 hectares by a further 200 and be earmarked almost exclusively for oil and gas-based investment.

For the expansion, it has already engaged Dredging International NV – Earth Moving Worldwide LTD (DINV-EMW JV) to develop Phase 1 of Sohar Port South. With an investment of $24 million, the agreement will see the development of the first 50 hectares of useable land within the new port expansion, which is expected to be completed within the next seven months. Upon completion, Sohar Port South will add additional 200 hectares in total to the present capacity of Sohar, currently standing at around 2,000 hectares. Almost all of the 200 hectares of the expansion has already been allocated almost exclusively for oil and gas-based investment, given its proximity to the bustling petrochemicals cluster.

«The Sohar Port South expansion is a very exciting project. In total, we aim to reclaim around 200 hectares from the sea, which will add to the port’s already existing 2,000 hectare capacity. In Phase 1, we have started with approximately 50 hectares land and will reclaim more land in later phases,” Geilenkirchen said.

Due to its close proximity to the bustling petrochemicals cluster, including the Liquid Berth and Tank Terminal, Phase One of the expansion will be assigned almost exclusively for oil and gas-based investment. Sohar International Development Company (SIDC), a 50-50 joint venture between the Omani government and the Port of Rotterdam, will be overseeing the entire project. The joint venture is expected to invest around $250 million in the Sohar Port South expansion project.

In September 2017, it signed a pact to develop a 45-hectare terminal for the handling, storage, and blending of crude oil, fuel oil, and diesel at the port. Total investment in the project, which will include facilities for other petroleum products in the next phase, is estimated at $600 million. Trescorp, which is a Singapore-based oil and petroleum products trading firm, has become one of the first investors to benefit from its new deep water project. Trescorp›s Sohar venture will require deep water berths of 25m drafts to handle supertankers of up to 320,000 DWT capacity.

“Other investors are also lining up to take advantage of the additional 150 hectares being offered as part of the expansion,” Geilenkirchen said without elaborating on any new projects.

Meanwhile, while maintaining a keen focus on increasing cargo volumes to attract larger ships, optimising energy usage, developing the food cluster, expanding capacity and capabilities, and attracting new investors to the Freezone, Sohar is focusing on modernising its operations and maximising its resources as well.

In 2018, it has adopted the theme of ‘Smarter Thinking’, aiming to further streamline operations and improve efficiencies. A ‘Smarter Thinking culture’ is defined as one that ensures innovative ideas are freely shared and championed.

Examples include capturing steam from the oil refining business and using it to provide energy to other Freezone businesses, a study into the conversion of port vehicles to run on hydrogen, and installation of solar cells around the head office to reduce the amount of electricity drawn from the power grid.

Geilenkirchen said it has characterised 2018 as the year of ‘Smarter Thinking’, a concept that encourages the sharing of innovative ideas to modernise and simplify operations, and at the same time inspire the principle of efficiency.

“One way in which we can do so is to take a useful by-product of one industry’s operations, especially those that have significant energy potential but would otherwise be treated as waste, and utilise that energy to feed other industries at the port and free zone that could make use of it. This in turn could reduce energy loads and costs,” he explained.

“A good example of this is the study we are conducting to convert our port vehicles to run on hydrogen; an underutilised by-product from industries here at the port. Additionally, we are installing PV solar cells around our head office, which will further reduce the amount electricity drawn from the power grid,” Geilenkirchen added.




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