19/10/2014 07:00 AST
An advertisement by the highway outside Dubai's massive Jebel Ali Port tells firms they don't need to ship goods through the Strait of Hormuz, the traditional gateway to the Gulf. Instead they can have goods delivered to a port in Oman, outside the Gulf, and bring them into the region by road.
'Why go through the Strait when you can go straight to the Gulf,' the billboard reads, in a challenge to Jebel Ali, which has become one of the biggest ports in the world by handling many of the region's imports via Hormuz.
The cheeky advertisement has been posted by Sohar Port and Freezone, an ambitious facility on Oman's northern coast about 200km to the southeast of Dubai.
Sohar is starting to compete for traffic with Jebel Ali and other top ports inside the Gulf, as part of a far-reaching plan by Oman to diversify its economy beyond oil. Its plan says a lot about how business in the region may develop in coming years.
Sohar's executive commercial manager Edwin Lammers said the port's intention to handle cargo for the Gulf region, not just Oman, was a key part of the country's drive to industrialise.
'It brings down supply chain costs for Oman,' he said at the Reuters Middle East Investment Summit.
'Once you have the additional capacity, new shipping lines come in, feeder lines operate and costs fall due to economies of scale.'
Oman faces, in a more immediate and acute form, the dilemma which all the Gulf oil exporters will face in coming decades: what to do when the oil runs out?
While Saudi Arabia, the UAE and Qatar have ample reserves to continue production of oil and gas for decades, Oman's reserves are much smaller, so crunch time for it is likely to come sooner.
Estimates by multinational energy company BP have suggested Oman's oil reserves could run out by around 2030 at current production rates.
So the government of ruler Sultan Qaboos, 73, is ploughing billions of dollars into efforts to make the arid country of about four million people into a logistics and industrial hub.
Among big industrial and infrastructure projects planned or underway are a $3.6bn plastics production complex to be built in the city of Sohar, a $400m steel plant in the southern port city of Salalah, a string of new or expanded airports, and a $15bn plan to build a 2,244km rail network, the country's first.
Sohar port will handle many of the imports Oman needs for its industrialisation and exports, which it hopes to produce. The Omani government and the Port of Rotterdam set up a 50:50 joint venture to run the port in 2002.
This year, Sohar completed a $130m relocation and expansion of its container terminal, which is operated by Hong Kong's Hutchison Whampoa. The project raised annual capacity to 1.5m 20ft equivalent units (TEU) from 800,000 TEUs, and allowed the port to handle large container ships of 10,000 TEUs for the first time.
Sohar plans to increase its container capacity to 4m TEUs in 2017 at a cost of between $155-180m, which is likely to be raised through bank financing.
'Once that's in place, you really start to compete with other ports in the region,' said Lammers, a Dutch veteran of the container port and stevedoring industries who joined the company in 2009.
Britain-based Tri-Star Resources has said it plans to build a $60m plant supplying about 12 per cent of current global production of antimony, a metallic substance used in many alloys.
Gulf Daily News
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