Gulf Construction Online - Industrial boost

Oman

On the cards ... The Wave, a $805 million tourism-cum-residential resort.

Industrial boost

01 March 2005

Not many visitors to Oman would realise that behind the serene facade of the Sultanate lies an industrial giant waiting to emerge by the end of this decade.

Given the number of gas-based industries that are being planned or have already got under way, the country can look forward to being counted among the most diversified economies of the region.
The scene of action for the industrial development is Sohar, where the government has unleashed a string of projects including the $1.25 billion Sohar refinery, a $230 million polypropylene plant, a $525 million methanol facility and a $600 million fertiliser project. The latest project added to the list is an aluminium smelter and an associated power project, which has just received the backing of Abu Dhabi Water and Electricity Authority (Adwea) and Alcan, the world’s largest aluminium maker. The two companies will take stakes (40 per cent and 20 per cent respectively) in the new project.
And to support all these mega projects, a major industrial port has been established in Sohar – which entails building separate facilities to serve these projects.
Elsewhere, other projects are under way including the third LNG train at Oman LNG and a fertiliser plant being developed by an Indo-Omani joint venture at Sur.
These developments are in line with Oman’s economic policy aimed at enhancing industrial sector’s contribution to gross domestic product (GDP) and thereby reducing the Sultanate’s dependence on oil revenues.
Besides industry, another key source of work for the construction industry will be the tourism sector, which the country has singled out as promising in its diversification efforts. Last year, a separate ministry was created to oversee the development of this key sector. The frontrunner among the major projects that have been pursued to further tourism is the RO56 million Barr Al Jissah Resort, which is nearing completion (see page 70). An even larger development on the horizon is the $805 million tourism-cum-residential resort called The Wave set to come up at Seeb seafront.
The Barr Al Jissah project has been keeping a number of contractors and suppliers busy over the past two years when the pace of construction has been particularly slow and the market too competitive.
While admittedly civil projects have been sparse over the recent past, a number of large road projects are in the offing which will ease access within Muscat and link interior areas. These projects should provide a considerable boost to the real estate sector.
Another big-ticket project is the Qasr Al Alam project, which involves extensive renovation of the corridor leading to the Guest Palace. There are also plans to develop a multimillion-dollar free trade zone in Salalah.

Oil, gas & industry
The success of Oman’s efforts in the gas sector hinges on the multi-million-rial Oman LNG and upstream facilities at Saih Nahayada in central Oman. Oman LNG’s 6.6-million-tonne facility – which is expected to earn up to $25 billion during its 20-year operational life, was built nearly four years ago. Now a third LNG train is coming up near the two-train facility in Sur. When completed in early 2006, the combined capacity of the three-train facility will be boosted to around 10 million tonnes, making it one of the largest LNG plants in the world.
Natural gas will play an important role in the economic development of the country by generating sizeable foreign exchange earnings and by providing cheap fuel for industries. So far, the confirmed gas reserves are around 22 trillion cubic feet (tcf), while the expected reserves may reach 35 TCF.
Oman’s ambitions of setting up an aluminium smelter have just received considerable impetus following Adwea taking a share in the development. Construction work on the 650,000 tonnes smelter in Sohar is expected to begin this year and production is slated to commence by the end of 2007.
Meanwhile, oil major Petroleum Development Oman (PDO) will be investing $2 billion over five years in four different areas — development of existing oil wells, drilling new wells, increasing production through enhanced oil recovery (EOR) and water flooding technique.
Construction work is under way on the $1.25 billion Sohar refinery and is expected to be completed in April 2006. The refinery, fully owned by the government, will consist of a crude unit with a capacity of 116,400 barrels per day (bpd) and a residue fluid catalytic cracking unit with a 75,260 bpd capacity. When operational in early 2006, the refinery will not only secure the country’s future demand for high-value refined products, but also herald a new era of exports of refined petroleum products from the Sultanate. The government in 2003 awarded the construction of the refinery to JGC Corporation.
Among other large industrial projects include:
• Oman India Fertiliser Company’s (Omifco) $1 billion project coming up in Sur;
• Another fertiliser project being set up by the Bahwan Group. The $500 million EPC contract for the plant – will produce 2,000 tpd of ammonia and 3,500 tpd of granular urea – has been awarded to a Japanese consortium of Mitsubishi Heavy Industries and Sojitz Corporation.
• A 1.75 million tpy methanol plant being set up by Oman Methanol and Derivatives Company;
• The 340,000 tpy polypropylene unit being set up by Oman Polypropylene near the Sohar refinery; and
• A $300 million ethylene dichloride project to 300,000 tonnes per year (tpy) of ethylene dichloride being set up Oman Oil Company (the investment arm of the government), in a tie-up with LG International of Korea and National Petrochemical of Iran. Construction is slated to commence in the first quarter of 2006, following financial closure in the last quarter of this year.

Airport
Oman has awarded the contract for the design and supervision of new terminals at Seeb and Salalah airports to a consortium comprising Danish company Denmark’s Cowi and Larsen Architects and Consulting Engineers. The proposed new terminal at Seeb would have a capacity to handle 12 million passengers yearly. The capacity of Salalah airport terminal will be expanded to nearly two million passengers.
The much-publicised airport privatisation contract was earlier awarded to a consortium comprising the British Airport Authority, ABB and a local business group through a competitive tender process in September 2001.
The government re-assumed the management of airports from the private sector last year after failing to reach an after failing to reach agreement on the financial basis for the development.

Tourism
The government has accorded top priority to the development of its tourism sector as part of the diversification programme to increase the sector’s contribution to the country’s GDP to 3 per cent by 2010 from 1 per cent now.
Last year the government and the private sector embarked on a series of landmark initiatives that promise to underpin the growth of a robust tourism sector in the Sultanate. Investments in lavish resort developments and property ownership by foreigners are set to transform the tourism landscape in Oman. Crowning these developments was the establishment of a dedicated ministry of tourism.
The Wave, an integrated residential and tourism resort planned along a pristine stretch of beachfront stretching from Al Athaiba to Seeb in Muscat, is expected to provide a considerable boost to the sector. The UAE-based business house Majid Al Futtaim has signed up as a key partner along with Waterfront Investments (representing the Government of Oman), and National Investment Funds Company (Nifco) and the State General Reserve Fund.
The upscale property, set on 200 hectares along 7.3 km of beachfront, is conceived as an exquisite tourism and residential seafront resort designed to be integrated into the Arabic culture, heritage and geography of Oman and will be developed in two major phases covering four zones.
Another major development is the Muscat Golf and Country Club in Seeb, which will feature luxurious villas and apartments and also comes with an all green PGA 18-hole golf course among other sporting and recreational amenities.
Some of the other tourism projects promoted by the government are $20 million Muscat-Sifah tourism corridor, the $19 million Ras Al Jinz eco- tourism project, $12 million project in Nakhal which will have a boutique hotel with health and hydro spas and access to Nakhal Fort, a $30 million beach retreat in Hayoot, Musandam (see page 58) and $45 million Salalah Coastal Resort which will include leisure facilities, a sports centre, a spa and a beach club.

Power projects
A large independent power project (IPP) with a capacity to generate 480-550 MW of power is planned for Sohar. The project – which will also produce 33 million gallons of desalinated water a day – is estimated to cost around $500 million and follows the successful completion of three other IPPs in Al Kamil, Barka and Salalah.
While full commercial operation is scheduled for early April 2007, the plant will be partly operational as early as April 2006, delivering 360 MW of power to meet the growing demand in Batinah region.
In another development, the much-awaited plans to link the Sultanate’s power grid with that of neighbouring UAE – part of the plan to integrate power grid of the GCC states- has moved ahead following the signing of an agreement between the two countries and the subsequent selection of a contractor to undertake this important project.
The project envisions an initial link-up between Al Wasit on the Oman side and Al Ain in the UAE. The plan is to have a 220 kV transmission line running 65 km from Al Ain to Al Wasit. At a later stage the power line is proposed to be extended further south and interlinked with the Barka transmission system. The project is expected to be completed by early 2006.

Roads
A master plan for a national road system is being designed to strengthen and expand road network in the Sultanate up to the year 2030. The master plan study, led by experts from the Japan International Cooperation Agency, will cover all regions of the Sultanate, with the exception of Muscat Governorate where road communications are under the purview of Muscat Municipality. It will identify the need for new highways, carriageways and secondary roads as well as suggest improvements to the existing roads.
The 40-45 km Southern Expressway, estimated to cost RO90 million to RO100 million, will link key areas of Muscat city and eventually link Dubai.
Some of the major road projects currently under way include the RO56.2 million Sur-Qurayyat coastal road project. The 88 km dual carriageway will drastically reduce travel time between Muscat and Sur, as well as open up large stretches of the Sultanate’s eastern coast to potential tourist and economic development.
This apart, a number of major road contracts have been awarded recently including:
• A 40-km link road connecting remote Mahout on the Wusta coast with the Nizwa-Thamrait highway.
• Rehabilitation of the Nizwa-Thamrait highway, linking of north Oman with the central and southern regions of the country.