Duqm is getting transformed into a world-class investment and leisure destination through planning, designing and implementing long-term strategies for infrastructure development. Muhammed Nafie reports
Duqm, located in Oman’s Al Wusta coast, is currently witnessing one of the most ambitious infrastructure developments to have ever taken place in the Sultanate. An integral part of Oman’s economic diversification strategy, the region is getting kitted out to attract foreign investors and emerge as Oman’ industrial hub. In order to translate the government’s vision to develop this part of the country, His Majesty issued Royal Decree No 119/2011 to establish the Special Economic Zone Authority atDuqm (SEZAD), as a regulatory and supervisory governmental entity responsible for regulating, managing and developing a special economic zone in Duqm.
With the land area of 2,000 square kilometres, Duqm free zone is the largest in the Middle East, Africa and Asia as well as the largest in the world. It is an integrated development comprising about eight zones including industrial zone, fisheries zone, sea port and drydock, residential zone, central business district, tourism and recreational zone, logistic hub and educational and training zone.
As many as $5billion has so far been invested in developing infrastructure facilities at Duqm, says Lee Chee Khian, CEO of SEZAD. In a bid to attract both foreign and local investments in Duqm, SEZAD plans to invest $1billion per year for developing infrastructure at the free zone and adjoining areas. These investments are for building the remaining infrastructure work at the port, a liquid berth, a fisheries harbour, main roads, power transmission and distribution lines and water pipelines.
Oman Oil Company and Kuwait Petroleum International, signed a JV to set up Duqm Refinery and Petrochemicals Complex at a cost $7billion. Once completed, the refinery will produce diesel, naphta, liquefied petroleum gas (LPG) and jet fuel.
The 230,000 barrels per day capacity refinery, which will be completed in two-years, is one of the most important industrial projects at DuqmSpecial Economic Zone. This facility, encompassing a giant crude storage park, product storage and export terminal, gas pipeline network, liquid jetty, and related transport and logistics capacity, can be leveraged to aid the Sultanate’s transformation into a formidable energy player in the region.
Around 60 to 65 per cent of the $7billion capital expenditure for building the refinery will be from international and local lending institutions. The work related to leveling the site of the refinery, which stretches over 900 hectares, has been completed, as well as laying the foundations for the construction of the refinery as per schedule. Oman Tank Terminal Company, a wholly owned subsidiary of Oman Oil Co, is implementing a massive crude oil storage park for exporting refined products and crude storage facilities on a 1600 hectare site at Raz Markaz, which will be linked to the refinery via a pipeline.
Local Omani firm Qurum Business Group (QBG) has been selected by SEZAD to undertake the construction of a utilities corridor that will link the refinery complex with a major Liquid Jetty under development at the nearby Port of Duqm. Products that will be handled by these pipelines include LPG, diesel, jet fuel and naphtha. Running the length of the corridor spanning the distance from the refinery to the Liquid Jetty, currently under construction on the Northern Breakwater of Duqm Port, will be a series of dedicated pipelines that will carry refined fuels and petroleum products for export. Products that will be handled by these pipelines include LPG, diesel, jet fuel and naphtha.
Marafiq, a joint venture firm set up by Takamul Investment Company (wholly owned subsidiary of Oman Oil Company) and Sembcorp Utilities of Singapore, is in the process of developing a 300 MW-capacity power project to meet the energy requirements of the refinery and petrochemical complex.
The first phase of Port of Duqm will be completed by June 2018. The first phase of the port include multipurpose terminal, dry bulk terminal and early operations container terminal, all of which are indispensable to port operations. This will be followed by construction of phase two, which would be completed between 2025 and 2030.
Operations in the Port of Duqm are heavily reliant on oil and gas related industry while officials are looking forward to more mining related activities. Recently the port has seen the first shipment of limestone from its commercial quay, when a ship laden with 55,000 metric tonnes (MT) of limestone left for India. The mineral commodity was mined and exported by Desert Enterprises Trading & Contracting from a limestone quarry located about 40 km from the port. Proven limestone reserves at the quarry are estimated at over 200 million tonnes. Expectations are that the limestone mine in Duqm will produce several hundred thousand metric tonnes of the commodity every month, the bulk of which will be exported via Duqm Port.
SEZAD has an ambitious seaport infrastructure plan. The authority has plans to create not just a normal container, bulk area port, but also a liquid terminal where oil and gas finished products will be exported. There will be a storage area as well. The construction work on the planned $513 million liquid terminal at the Duqm port to handle the import and export requirements of the refinery will start very soon. Presently, the Royal Boskalis is working on a detailed engineering design and mobilising equipment and materials for construction work. The construction will be completed in 32 to 33 months. The bulk liquid berth will handle ships loading and unloading liquid cargoes linked to, among others, the DuqmRefinery and future petrochemicals scheme.
At the port, the joint venture of Serka Taaghhut and MSF is implementing the IP2 package of works, which includes the construction of roads, terminal infrastructure and buildings at the Commercial Quay and Operational Zone areas of the port. This key contract is targeted for delivery by around mid-2019.
Port of Duqm plans to study the feasibility of accommodating a Floating Storage Regasification Unit (FSRU), a specially refitted vessel designed to store, transport and regasify liquefied natural gas (LNG), at the maritime gateway.
The port also plans to establish a dedicated terminal for roll-on/roll-off (RO-RO) cargo at its commercial quay — a move that underscores Duqm’s potential as a hub for automotive-related activities and RO-RO transshipment. The RO-RO terminal has now been envisioned as part of the port’s 2.2 km-long commercial quay. It will be located between the Multipurpose Terminal and a pair of Container Terminals planned at the port.
Karwa Motors, a joint venture of Oman Investment Fund (OIF), a sovereign wealth fund of the Sultanate of Oman, and Karwa of Qatar, aims to commit RO160mn in the establishment of a major auto assembly plant at the SEZ. A one million sq. metre plot earmarked for the project will host a complex with a capacity to produce around 2,000 units of buses, trucks, cars and other vehicles of various sizes. Oman Investment Fund is also firming up plans to set up another auto plant at Duqm in partnership with Iran Khodro Industrial Group, the largest auto maker in Iran. Orchid International Auto, the proposed JV, plans to invest around $200 million in an export-oriented facility at the SEZ. Additionally, OIF is weighing other auto-related investments in the SEZ designed to underpin the growth of an automotive hub at Duqm.
Oman Drydock Company (ODC) has handled around 450 ships of various types and sizes at its high-tech facilities for maintenance and repairs since it was launched in 2011. The company hopes to reach the landmark figure of 500 vessel dry-dockings sometime in 2017. The yard has delivered a 15 – 25 per cent improvement in its bottomline over the 2015-2016 timeframe.
ODC is looking to partner with a leading international marine engineering services provider aimed at adding a specialist market segment to its diversified portfolio of ship repair and maintenance services. Five prominent marine engineering services firms based in Europe and the Far East are currently in contention for a partnership arrangement with ODC.
The new Duqm Naval Dockyard (DND), a joint venture between Oman Drydock Company (ODC), wholly owned by the Omani government, and Babcock International Group, the UK’s leading engineering services provider for the British Navy, is coming into operation soon. The official launch of the new entity, which will be located at ODC’s state-of-the-art ship repair yard at Duqm, will help fuel the inflow of naval ships from British, European and other friendly international navies for repairs and maintenance services.
China Industrial Park
A total of 10 sub-usufruct agreements were signed between Wanfang Oman and some Chinese companies to implement $3.06billion worth projects at a sprawling 1,172-hectare China-Oman Industrial Park in Duqm. The first phase is for solar panels, tubular pipes. The investments for the park is expected to cross $10billion by 2022. The 10 projects include building a manufacturing facility for solar energy equipment with a capacity of 1,000 gigawatt per annum, a factory for oil and gas services, water desalination plant, a facility for bromine exploration, a power plant, a five-star hotel, construction materials factory, a 4×4 vehicles factory and a factory for non-metal pipes used in oilfields.
A 150-strong contingent of Chinese dignitaries, investors, executives and officials turned out for the agreement signing, which took place in conjunction with the ceremonial breaking of the ground on the China-Oman Industrial Park at Duqm.
Hebei Electric Power Design & Research Institute and Ningxia Electric Power Design Institute — subsidiaries of the Power Construction Corporation of China, are investing $406million in the establishment of a 300MW power plant. The facility will meet the electricity requirements of tenants operating within the park.
Investors from China are also weighing plans to develop a pair of methanol projects in Duqm. The ventures are being mooted by two separate groups of Chinese investors. Both are trying to first secure gas supply before they can decide on the next steps. Both are also looking at alternative feedstock supplies besides piped gas, including condensate and liquefied natural gas (LNG). The projects have the potential to spawn the growth of downstream petrochemical businesses.
One of the two proposed methanol plants is backed by a Chinese group which has a subsidiary in the UAE. The other is mooted by investors based in the northeastern part of China where they source their feedstock requirements from Russia. They want to come to Duqm because their goal is to supply methanol to central Asia and the western part of China utilising the shorter route via the Pakistani port at Gwadar to access these markets.
Local contracting firm Al Duqm Global Construction has been awarded the main contract to undertake the construction of Oman’s first sebacic acid plant at the Duqm Special Economic Zone (SEZ). Total investment in the project, promoted by Omani-Indian joint venture Sebacic Oman, is estimated at RO62.7million. “Almost 55 per cent of the plant’s construction has been completed; the plant will be commissioned by the end of 2017 and will start full-fledged production in the first quarter of 2018,” says CEO, Pradeep Kumar Nair. He adds, “Sebacic Oman is going to be the largest bio refinery plants in the world. Once the plant is commissioned, there will be more activities in Duqm, because we have many ancillary industries attached to us. In addition, we’ll be the largest users of sulphur from the refinery, as we are going to use 200 tonnes a day.”
Renaissance Village Duqm
Renaissance Village Duqm, an iconic 17,000-bed facility to accommodate people working for different projects in Duqm free zone, became operational in April, 2017. Through this world-class facility built at a cost of RO75million in an area of 200,000m2, SEZAD shows the world how to look after workers at high standards, but affordable competitive rates.
The village is 51 per cent owned by Renaissance Services, which has a proven track record of building quality workforce accommodation, i.e. permanent accommodation for contractors (PAC) located close to Oman’s major oilfields in Al Wusta region. Other stakeholders of the facility include Oman’s Sovereign Wealth Fund, Pension Fund, banks and local community investors.
“The whole plan comes from SEZAD’s vision to have quality but affordable accommodations available for workforces in Duqm,” says Stephen R Thomas, CEO of Renaissance Services. “Renaissance Village Duqm is another one in our series of villages in different parts of Oman; but it’s much larger than anything we have done before. This can accommodate 16,960 people of which nearly 800 will be our staff.”
Several major developments are also ongoing at a cost of several hundreds of millions of dollars. Galfar Engineering & Contracting is constructing the nation’s largest fishery harbour, which will anchor an Industrial Fisheries Hub planned as part of the economic zone. The contract, comprising marine infrastructure and road networks linking the facility to the zone, is due for completion in Q2 2019.
Another important project is the construction of the Jurf and Saay channels designed to secure the economic zone against potential flooding. The partnership of Serka Taaghhut and Ajab is executing this package of infrastructure works, while Premier International Projects is undertaking the construction of flood protection dams upstream of these channels, aimed at staving off destructive flood events in the future. Both contracts are due for completion in the second half of 2019.
In another development, Al Anwar Holdings has announced that it has signed a shareholders’ agreement with Iranian cement firm Hormozgan Cement Co (HCC) to establish a Greenfield cement mill in Duqm. The new cement grinding unit, to be named Hormuz Al Anwar Cement (HAC), will have a grinding capacity ranging from 600,000 tonnes to one million tonnes per annum.