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.