01/09/2014 11:19 AST
The Gulf’s oil bonanza and resulting economic windfall has in recent years placed unprecedented burden on the region’s transport infrastructure, impacting its ability to trade efficiently with the outside world, writes Simon Hallett in an article in The Gulf, our sister publication.
The six states have allocated billions of dollars to new cross-border transport projects, including ports, which link directly into new industrial parks and economic cities with the promise of long-term benefits.
Priority has been given to not only modernising ageing port facilities, but also building new facilities on greenfield sites across the region. An estimated $35 billion is currently being spent on port projects in the Gulf, as states seek to leverage greater economies of scale that come with greater capacities, while enhancing their appeal as trans-shipment hubs.
Gulf ports have become much more than just entry and exit points for consumer goods and manufactured exports. Taking a leaf out of Dubai’s Jebel Ali Port - a major international trans-shipment hub and its adjacent free zone - the world’s largest park of its kind which was established in 1985 - regional ports have become economic ecosystems in their own right, making vital contributions to national revenues and creating much-needed jobs in local communities.
Oman, one of the Gulf’s least developed states, makes arguably the most interesting case study in how ports can help influence economic policy and even political direction.
In February and March 2011, the town of Sohar, north of the capital Muscat, saw a wave of anti-government protests, some violent. Among the demands of the protesters were jobs and an end to government corruption. The entrance to the port was blocked temporarily, disrupting the local economy.
Calm has returned to Sohar, and along with it a sense of economic uplift, with the port at its heart. To date the town’s free zone, which started operations in 2009, has attracted more than $15 billion in investments.
This figure should rise significantly.
Fresh capital injections have been earmarked by the authorities to expand terminal capacity at Sohar. The authorities hope this will, in turn, stimulate further investment - including foreign money - into industrial projects and the free zone in the port’s vicinity.
The $130 million infrastructure upgrade at the port will see handling capacity of the Oman International Container Terminal (OICT) doubled to 1.5 million TEUs (containers) per year, enabling it to cope with a rapid growth in volumes. Sohar Industrial Port Company, which manages the port and free zone, announced that the port had achieved an aggregate cargo throughput of about 50 million tonnes last year.
But arguably the jewel in the crown of the town’s broader long-term economic vision will be a $6.5 billion refining and petrochemicals project. The so-called Expanded Petrochemicals Cluster, located next to the port, is a venture by state-run Oman Oil Refineries and Petroleum Industries (Orpic), and its parent company Oman Oil Company. The project blueprint calls for three major refining and petrochemical complexes to be built over the next five years. One of the many goals of such an ambitious plan will be to create more jobs for citizens in the remote location some 230km northwest of Muscat.
A similar strategy is being adopted in southwest Saudi Arabia, where another of the kingdom’s large economic city developments is slowly taking shape, and where again a revamped port will take centre stage.
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