Sohar Port and Industrial Area ... a hive of activity.
Sohar takes centre stage
01 February 2006
Industry and tourism are the two pillars of Oman’s Vision 2020 programme for long-term sustainable development and the Sultanate is now fully exploring these avenues to move on the fast track into the growth super-highway.
Going by statistics, some $31 billion has been invested recently in industry, tourism and real estate alone. Though it isn’t the frenetic pace that is being witnessed in Dubai, nevertheless billion-dollar projects have already been unrolled in Oman, setting the path for economic diversification, in view of the Sultanate’s declining crude oil production and limited natural gas resources.
Sohar is the scene of the action and Oman is injecting substantial funds in expanding its new seaport there to handle exports from the mega industries which are due to begin operations during 2008. Already investments totalling $12 billion have been made in the zone, according to Oman’s Economy Minister Ahmad bin Abd a-Nabi Maki.
The real estate sector, meanwhile, is reported to have attracted more than $19 billion in direct investment in the past two years. The Omani government is also liberalising investment and property laws to increase the flow of foreign direct investment and has issued a new property law allowing foreign ownership of properties. Standing to gain immediately from this easing of the real estate sector are the Blue City and The Wave, Muscat resort.
Sohar
The 2,000-hectare Sohar port and industrial zone is currently a hive of activity with some 12,000 to 15,000 workers on site building the infrastructure that will house mega industrial facilities ranging from an oil refinery and aluminium smelter to steel mills.
The zone will be one of the world’s biggest greenfield petrochemical and metal-based industrial hubs.
The port (see below) as well as the industrial zone are being developed simultaneously with the state-owned Oman Oil Company (OOC) being responsible for the development of gas-based industries and downstream energy or energy-related projects in Oman in conjunction with local and international investors.
Sohar Refinery, described as the anchor of the petrochemicals cluster envisioned at Sohar, is rapidly taking shape. Also under way or in the pipeline are Oman Polypropylene Company’s (OPP) polypropylene plant which is integrated with the refinery, an aluminium smelter, Sohar International Urea & Chemical Industries (SIUCI) urea facility, a $350 million integrated steel complex, the $500 million methanol scheme of Oman Methanol Company (OMC), a $1 billion polyethylene project jointly promoted by OOC and Dow Chemical and the world’s largest shipping pallet manufacturing plant being developed by PVAXX Industries, at a cost of $230 million on a 15-hectare plot.
Sohar Aluminium smelter: The agreement to set up the $2.4 billion smelter was signed by the UAE and Oman in December and already the UK/Local Carillion Alawi has started mobilising on the estimated $10.3 million earthworks package for the project, which will be owned and operated by the Sohar Aluminium Company.
The shareholders in Sohar Aluminium are Oman Oil Company (OOC) and Abu Dhabi Water and Electricity Authority (Adwea), both with 40 per cent, and Alcan, with the remaining 20 per cent. Bechtel is the engineering, procurement, management (EPCM) contractor. Contractors have been invited for the civil works package.
When completed in mid-2008, the Sohar smelter (the first greenfield smelter in the Middle East in the last 25 years) will be able to produce 350,000 tonnes of aluminium ingots per year.
The smelter will have long-term access to a dedicated supply of electricity through the construction of a new Sohar Aluminium-owned 1,000 MW power plant, for which Alstom of France has won a $510.6 million engineering, procurement and construction (EPC) contract. The project, which has just been launched, is due for completion in June 2008.
First metal from the smelter is scheduled for the third quarter of 2008 with full commissioning by the end of the year.
Sohar Refinery: The crude unit of the sultanate’s second refinery – the first being the 85,000 barrels per day (bpd) capacity Mina Al Fahal refinery – is expected to begin trial runs this May while a residue fluid catalytic cracker is set to move into production shortly to support a new polypropylene complex. The crude unit of the $1.25 billion refinery has a capacity of 116,400 bpd and the residue fluid catalytic cracking unit has a capacity of 75,260 bpd. The refinery is operated by Oman Refinery Company, which also intends to expand the capacity of the Mina Al Fahal facility to 106,000 bpd. Plans include linking Mina Al Fahal to the Sohar complex with a 277-km pipeline to ship over a mixed feedstock of crude and long residue from the Oman Refinery to Sohar for processing.
The refinery will produce around 327,000 tonnes per day (tpd) of propylene, which will be supplied as feedstock to Oman Polypropylene coming up near the refinery.
The refinery will also supply naphtha and gasoline as feedstock to Aromatics Oman.
Oman Polypropylene: Civil works are also well under way on OPP’s 340,000-tpy capacity polypropylene plant, which is integrated with the refinery. The $313 million project will add value to Sohar Refinery’s propylene stream to produce polypropylene that can be used in an array of downstream industries.The plant is targeted for commissioning by mid-2006. Oman Polypropylene is 60 per cent owned by OOC, and 20 per cent each by Gulf Investment Corporation and LG International of Korea.
Oman Aromatics’ petrochemical complex: A 810,000 tpy paraxylene plant and a 210,000 tpy benzene plant will be part of this $1.1 billion petrochemical complex which will be operated by Oman Aromatics (60 per cent owned by OOC and 20 per cent each by LG and Oman Refinery Company), which is targeted for commissioning by September 2008. South Korea’s GS Engineering & Construction is due to sign a contract shortly for the construction of the plants.
Sohar International Urea and Chemical Industries (SIUCI): This $650 million Suhail Bahwan group initiative is expected to produce 1.2 million tpy of urea a year, starting early 2007.
Oman Methanol Company (OMC): Also in 2007, OMC is scheduled to launch production at its 1 million-tpy methanol plant.
Meanwhile, shareholders of OMC have established a new company, Sohar Methanol Company, to build a second plant, which would be similar in size to OMC’s first plant and estimated to cost around $500 million. The Sohar Methanol plant is expected to be commissioned in mid-2008.
Formaldehyde plant: Part of OMC's output will supply a new $21 million formaldehyde plant, being developed by a 50:50 joint venture of Omzest and Saudi Arabia’s Manso Group. Construction of the plant is due to begin in mid-2006 with commissioning set to coincide with OMC’s methanol unit.
Shadeed steel complex: Abu Dhabi-based Al-Gaith Holding Company intends to set up the 1.5 million-tpy Shadeed integrated steel complex in Sohar. Japan’s Kobe Steel has the 30-month engineering, procurement and construction (EPC) contract.
The complex, which is the sultanate’s first iron and steel plant, will require a total investment of $350 million in the first phase. It will have a dedicated berth at Sohar port with a depth of 16 m and a length of 300 m. It includes a 500,000-tpy direct reduction iron (DRI) unit and a 1 million-tpy steel meltshop. Further expansions planned at the complex include a 4 million-tpy pelletising unit, which is expected to take project costs beyond $700 million.
Polypropylene project: Oman Petrochemical Industries Corporation (OPIC), a joint venture between the government, Oman Oil Company and the US' Dow Chemical Company will also build 1 million tpy polyethylene plant. The estimated $2 billion project calls for the construction of an ethane cracker with capacity of just under 1 million tpy, three polyethylene and two polypropylene units, a gas treatment plant and a natural gas liquids (NGL) fractionation plant.
Steel pipes: Steel tubes and pipes manufacturer Al Jazeera Tube Mills Company (JTMC) has decided to set up a $46.8 million mill in Sohar.
Elsewhere around the expansive complex, investors and contractors providing various utilities for the port and industrial complex are working to get their facilities up and running in time for the scheduled start-up of the first major projects, notably the refinery and polypropylene plants, by mid-2006.
Sohar Power Company has already commenced work on the first phase of an independent water and power project (IWPP) that will ensure 360 MW of generation capacity by April. When fully operational, the IWPP will generate 585MW of power and 33 million gallons of water per day.
Ports
On Sohar Port itself – where some 1,800 m of quay wall is completed and is partially operational – construction work is under way on the second phase of the port infrastructure, including additional berths and landside areas while bids have been invited for phase three berth work. It includes the deepening of existing berths and of the approach channel to 18 m from 16 m, in addition to dredging work for a bulk liquids berth and a 450-m quay wall.
Sohar Industrial Port Company (SIPC) – the landlord and manager of Sohar port – is also developing the organisational and institutional framework of the port, parallel to the construction activities of the port infrastructure and the industrial plants. In this task it is drawing heavily on the operational and management experience of the Port of Rotterdam, which is a stakeholder in the Sohar port project.
Meanwhile, the government has also given the go-ahead for the multi-million-dollar expansion of the Port of Salalah’s container terminal facilities. A $262 million construction contract has been awarded to Consolidated Contracting Company and Hani Archirodon for the construction of two additional berths of 18 m depth and the construction of a new 2.85 km breakwater.
The port will also be able to handle eight container vessels simultaneously at its enlarged facilities once these are completed in the third quarter of 2007. The expansion will take the total TEU capacity at the Port of Salalah to approximately four million TEU per annum.
Tourism & real estate
Work is expected to be launched shortly on Phase One of the $29 billion Blue City project near Sawadi Beach following the signing of a $1.9 billion construction agreement for work on the ambitious development (see separate report).
Meanwhile, eight international firms are reported to be vying for a dredging package for the $1 billion Wave project (see separate report).
Among other developments, the frontrunner among such projects, the Shangri-La Barr Al Jissah resort in Muscat – which is due to soft open all its three hotels at the end of this month – is launching the next phase of work at the development involving the construction of 125 luxury residential units. Turner Construction – International, which was project manager for the hotels, is also taking on the role for the extension.
Construction work is under way on the 18-hole Muscat Golf Course project, which is targeted for completion by the year-end. A number of villas and apartments are planned to be built alongside the course.
Also planned to be launched this year is a tourist resort at Ras Al Hadd in Sur to be financed by the Qatari Diar Real Estate Investment Company. The project will comprise a five-star hotel with chalets, an exhibition centre, a golf course and a club surrounded by residences, a coastal entertainment and sports club, restaurants and cafes and a market for local and traditional crafts.
Roads
Among the largest civic infrastructure projects to go ahead recently is the 54-km Southern Expressway, construction on which was launched last September. Galfar Engineering is the main contractor on the project, which will be built in two stages. The first phase of the expressway will connect Qurum and the Nizwa turnoff while the second phase will be undertaken from the other end from Naseem Park to Al Ansab. The $342 million infrastructure project is due to be completed in four years.
Power, water & wastewater
Apart from the Sohar power plant, prequalifed developers have been invited to submit their bids by the end of next month for the Barka/Rusayl brownfield IWPP. The project involves the acquisition from the government of the existing 668 MW Rusayl plant and the construction of a greenfield plant at Barka, with a capacity of 500-700 MW and 30 million gallons a day of desalination. First power supply is due in April 2008 and the plant is due to reach full capacity a year later.
Among other developments, Larsen & Toubro Oman is expected to start work next month on its $22 million contract to build a sewage treatment plant (STP) including a sewerage network at Nizwa, Oman. L&T Oman is scheduled to complete the assignment in 18 months.
Meanwhile, the company’s associate Larsen & Toubro Electromech has secured a $37.5 million contract from Petroleum Development Oman for revamping and upgrading the transmission lines and substations in its existing oil fields in Central Oman. The work is scheduled to be completed by February 2007.
Other projects
State-run Petroleum Development Oman (PDO) has opened a $150 million gas treatment plant, with a capacity of 20 million cu m of gas per day. The plant was built by Canada-based SNC Lavalin in association with local firm Al Hassan Engineering Company. PDO has also recently signed an EPC contract with Petrofac and its local partner Galfar Engineering to set up a gas plant with a capacity of 20 million cu m per day at Kauther in central Oman. The job is worth more than $200 million and will take three years to complete.
• The local Royal Oman Police recently awarded a contract to Galfar Engineering & Contracting for the construction of a new $140 million prison in Sumail Town in the Dakhliya region. The building will have a total built-up area of 600,000 sq m.
