Duqm Special Economic Zone: a new growth pole for Oman

The geographical size of the Special Economic Zone (SEZ) of Duqm is breath-taking — a reflection of the government’s ambitious vision for this hub as a new growth pole for Oman.

Thus, while hydrocarbons fuelled the Sultanate’s economic development over the past five decades, the Duqm SEZ will supplement this effort over the next half-century and beyond. What is envisaged at Duqm is not a project with an operational life of a few decades, but one that extends over next couple of centuries — which explains the mammoth land mass — roughly equivalent to the size of a small country in Europe or the Southeast — of this exciting new economic destination.

Not surprisingly, given the long-term scope of the SEZ project, the Omani government has begun canvassing international capitals for investment. Over the past year, high-level teams from the SEZ Authority have been staging elaborate roadshows in a number of countries in Asia, Americas and the Far-East. Destinations have included the United States, Russia, France and India. And given the import attached to this roadshows, high level executives representing Ithraa (the Public Authority for Investment Promotion and Export Development), State General Reserve Fund (SGRF), Oman Oil & Orpic Group, Port of Duqm and other major government stakeholders have joined in as well.

The latest of the series of roadshows, centring on the ‘Invest in Duqm’ theme, was held in Moscow, where the visiting delegation met with top Russian officials representing, among others, the Russian United Shipbuilding Company — a conglomerate that operates over 40 shipyards and employs around 100,000 workers. Opportunities for partnerships with Oman Drydock Company (ODC), a world-class ship repair yard in its own right, were explored as well.

On the occasion, the SEZAD team also met with officials of the Russian Direct Investment Fund (RDIF), a Russian sovereign fund that allocates 20 per cent of its investments to projects outside Russia, and VTB Bank Group, a grouping of more than 20 credit institutions and financial companies that facilitate international partnerships and encourage Russian companies to invest abroad, and Rusnano Group, which specializes in nanotechnology projects.

The Russian trip represented the second leg of a multi-country promotional campaign following a successful roadshow held in the Indian capital, New Delhi, earlier this year. The Moscow campaign targeted a number of Russian companies specialized in the investment sectors in Duqm, such as shipbuilding companies, technology parks and major industrial companies.

The roadshows are an opportunity to showcase the promising investment potential of the Duqm SEZ, which already incorporates the mega Sino-Oman Industrial City, Little-India investment zone, and a full array of Heavy Industrial, Petrochemical, Mining, Fisheries, Light Manufacturing and Logistics Clusters.

Duqm’s proximity to the markets of the Gulf, Asia and Africa makes it an attractive investment and logistics destination, supplemented by its world-class infrastructure, maritime port and ship repair yard. A favourable investment and regulatory regime also underpins this appeal.

Invest in Duqm

Earlier, in March, a French business delegation led by Frédéric Sanchez, Chairman of the MEDEF International (French Business Confederation), visited the SEZ in Duqm to explore investment opportunities in the zone. The visit is the latest in a succession of exchange visits made by French enterprises and the SEZ Authority since the start of last year, which culminated in the establishment of an alliance of five major French companies that have evinced interest in the SEZ.

MEDEF International is a non-profit private-funded organisation, created in 1989 by MEDEF, the French Business Confederation. MEDEF International is the most representative organisation of the French private sector at an international level. MEDEF International aims at promoting the French companies’ know-how abroad through collective actions. It gathers every year about 7,100 French companies already operating in the world, in 85 Business Councils headed by 55 CEOs of major international French companies.

In January, the ‘Invest in Duqm’ roadshow was held in the Indian capital, New Delhi, which generated significant interest from the local business community.

Shaikh Hamad bin Saif al Rawahi, the Sultanate’s Ambassador to India, noted that the ‘Invest in Duqm’ seminar exemplified the common desire of the two countries to strengthen economic relations between them. The visit of Indian Prime Minister Narendra Modi to the Sultanate in February 2018 has contributed to strengthening these relations.

On the ground in Duqm, a number of prominent infrastructure projects are already in advanced stages of development and operation. Notable is the Port of Duqm, which is gradually making the transition from Early Operations to full-fledged commercial operation. Oman Drydock and Duqm Airport are in full operation as well. So are a number of high-end hotels and hospitality properties.

Anchor schemes

The world’s eyes are now riveted on the Duqm Refinery project — a mega scheme that will put Duqm firmly on the global map when it comes on stream in 2024. Construction work on the massive venture is well under way with tens of thousands of workers, employed by a plethora of contractors, currently at site.

As a world-class grassroots refinery based on advanced technology, the 230,000 barrels per day capacity Duqm Refinery will produce an array of clean products that comply with global standards for quality and safety. The state-of-the-art refinery will also bolster the energy industry of the Sultanate by strengthening the supply and production of Diesel, Jet fuel, Naphtha, LPG, Sulphur and Pet coke as its primary products.

Recently, Duqm Refinery and Petrochemicals Industries Company (DRPIC) — a partnership of Oman Oil & Orpic Group and Kuwait Petroleum International (KPI), unveiled the second phase of the project. The partnership announced the award of the Front End Engineering Design (FEED) work of a downstream petrochemical complex to the UK’s Wood plc.

The FEED services for the Duqm Petrochemical Project (DPP) include also the NGL Extraction facility in central Oman and the 230 km pipeline from concession areas to the Petrochemicals complex in Duqm that falls under Oman Oil and Orpic Group’s scope. A pipeline will be constructed to transport NGL stream from the NGL extraction plant to the petrochemical complex. Technology selection and award of the multiple licensed units for the Petrochemical Complex will be completed in the early stage of FEED.

At the centre of the project is a mixed-feed Steam Cracker with a capacity of 1,600 KTPA ethylene processing selected Duqm Refinery product streams; Liquefied Petroleum Gas (LPG), Full Range Naphtha (FRN), off gases and Natural Gas Liquids (NGL) extracted from natural gas available in Central Oman.

The project proposes to produce new products for the first time in Oman such as Ethylene Glycols, Oxo Chemicals, Butadiene and increase the diversity of the existing petrochemical portfolio in Oman. The expected polyethylene and polypropylene grades produced by DPP would both differentiate and complement the current shareholder product portfolio.

The diverse DPP products provide building blocks for a vast variety of value-added products, which in turn provide a foundation for downstream industries/projects within SEZAD, Oman and beyond, offering the potential to attract foreign direct investment and support domestic growth.

Burgeoning infrastructure

Infrastructure development at the SEZ is continuing apace as well. In May, Yahya bin Said al Jabri, Chairman of the SEZAD, signed a total of six agreements to strengthen infrastructure across the SEZ. Local Omani firm National Engineering Office (NEO) has been selected to provide design and construction supervision services covering a new 51 km road linking Duqm Airport with Ras Markaz where a major crude oil park is envisioned.

Also on the occasion, an agreement was signed with Al Bustan Construction Company for the levelling of a 5.5 hectare piece of land within Logistics Area A of the Port of Duqm. An earlier contract saw the levelling of 65 hectares with the Logistics Area, which will eventually cover around 1,000 hectares. The Port’s Logistics Zone is witnessing increasing demand from investors due to its proximity to the commercial pier.

Low-carbon

In line with its reputation as a futuristic hub, the SEZ is proposed to source its energy needs from renewable and sustainable resources. Notable is a wind-based Independent Power Project (IPP), dubbed ‘Wind 2023’, which will be built at an estimated cost of around $1 billion. A wind resource assessment (WRA) for the project will be initiated during the third quarter this year, with the qualification process expected to commence in Q3 2020. The anticipated Scheduled Commercial Operation Date (SCOD) will be in Q4 2023.

More recently, OPWP said it is weighing the development of the nation’s first-ever Thermal Solar project to support the future energy requirements of Duqm. It noted that plans for a Thermal Solar plant will only proceed if a Clean Coal Independent Power Project (IPP) proposed at Duqm does not get the government’s green-light before the end of this year.

Envisaged in lieu of the clean coal power plant is a 600 MW Thermal Solar project — also known as a Concentrated Solar Power (CSP) project. CSP plants use thousands of parabolic trough mirrors to convert the sun’s energy into high-temperature heat which is then channelled through a conventional generator to produce electricity. The proposed venture will also include thermal storage to keep operating after sundown.

Electricity demand growth is projected to grow at a blistering 23 per cent per annum over the next five years in line with expectations of strong investment inflows into the SEZ — the largest of its kind in the Middle East. The SEZ and its environs are currently served by a 67 MW diesel powered plant operated by the Rural Areas Electricity Company (RAECO).

Given the SEZ’s importance as a potential dynamo of Oman’s long-term economic growth, the government is keen to ensure its energy needs are secured. To this end, Oman Electricity Transmission Company (OETC) — also part of Nama Group — is working to integrate the Duqm Power System with the Main Interconnected System (MIS) that covers much of the northern half of Oman. The North-South Interconnection Project will be substantially in place by 2023.

- Oman Observer