Maritime gateway: Developments at the Port of Sohar are turning it into a logistical hub

Sohar’s significance as an economic engine for Oman’s modernisation programme becomes more evident each year. Its expanding port capacity, growing industrial estate, strategic location and attractive regulatory environment continue to lure new investments. The Greater Sohar Industrial Zone, also known as Gateway Sohar, includes the Sohar Industrial Estate (SIE), the Port of Sohar, Freezone Sohar and plans for a number of airport and rail projects. The Oman National Rail Network is designed to connect Salalah to Sohar and Sohar to the UAE, making Sohar an eventual focal point for the sultanate’s rail-freight transport into the GCC.

Pelletising Complex

In December 2007, one of Oman’s largest international investment projects got under way when the Brazilian mining giant Vale established its iron-ore pelletising complex in the Liwa province, just north of Sohar. In March 2010, the $2bn investment brought its first phase of development to a close, and the plant now has the capacity to produce up to 11m tonnes of iron ore pellets a year.

A new plant currently being discussed could increase production capacity to about 18m tonnes of iron ore a year by 2018. The project, however, depends on the availability of natural gas, which was still to be negotiated with the Ministry of Oil and Gas as of late 2013. The current Vale plant already employs 1200 workers directly, more than 60% of whom are Omani, and supports 3120 other jobs indirectly. Marcos Beluco, Vale’s country manager, described its operations thus in a June 2013 interview, “The [port] centre in Liwa boasts a maritime terminal with two berths for export and one for import, with an annual throughput capacity of 40m tonnes of blended iron ore and pellets. The deep waters of the Port of Sohar enable Vale to receive very large ore carriers that transport iron ore from Brazil, with a loading capacity of 400,000 tonnes.”

Sohar Bulk Terminal

The recently inaugurated Sohar Bulk Terminal was built as an extension of the already 1380-metre-long deepwater jetty operated by the Brazilian firm. The technical design for the terminal, a joint venture between Oman-based Khimji Ramdas Shipping, India-based TM International Logistics and the Sohar Industrial Port Company, projects a dry bulk capacity of 10m tonnes per annum (tpa) upon the terminal’s completion. In the two-year interim phase, dry bulk logistics will be handled by the port’s Berth no 14 until operations start to be shifted over to the new bulk terminal by mid-2014, according to MC Jose, CEO of Khimji Ramdas Projects and Logistics Group.

One of the primary catalysts for the Port of Sohar’s recent expansion and development boom is the announcement in 2011 by the Ministry of Transportation and Communication that it will convert Port Sultan Qaboos in Muscat into a tourism and maritime heritage destination. In order to improve the appeal of the capital city to visitors, the government intends to shift all commercial import and export operations from Port Sultan Qaboos to the Port of Sohar in phases over the next several years.

Major shipping firms are therefore refocusing their logistics in the sultanate and have pre-emptively invested in the Port of Sohar’s facilities in anticipation of the switch. Badar Shipping Agencies, for example, announced plans in mid-2013 to reorient its traffic toward Sohar and eventually to Duqm as well. “We are in serious talks with some of the international warehousing experts for building a logistics centre in Sohar,” said Abdul Rahim Kassim Kassim, general manager at Badar Shipping. “If all goes well, we will earmark our warehouse construction in 2014, as Sohar is going to be Oman's focal point when it comes to export-oriented business in future.”

New Route

Another significant signing for the port was the implementation of a new container service route to and from Sohar, operated by Japan-based Mitsui OSK Lines (MOL). The MOL Tyne container ship, with a capacity of approximately 5400 twenty-foot equivalent units, will dock in Sohar as part of the MOL’s new China-Middle East Express route. As of March 2013, a total of six vessels, including the MOL Tyne, are deployed along the weekly route that begins and ends in Ningbo via Shanghai, Hong Kong, Chiwan, Singapore, Jebel Ali, Abu Dhabi, Sohar, Singapore, Nansha and Xiamen. As the new service operates non-stop from Singapore to Sohar, it provides Omani exporters with a strong opportunity to reach East Asian markets. As new investors enter Sohar’s industrial zone and more raw materials are processed for export, access to Asian markets is likely to be a top priority.

Natural Gas Supply

The ongoing challenge for various industries with expansion plans for their facilities in Sohar, such as Vale, Sohar Aluminium and Gulf Mining Materials, is a cheap, continuous supply of natural gas. In pursuit of expansion, each of these industrial players is requesting larger gas allocations from the government. As a result, the sultanate could end up prioritising and rationing until more reserves come on-line, causing expansion delays. Meanwhile, gas prices are expected to double by 2015. According to a late-2012 statement by Nasser bin Khamis Al Jashmi, then-undersecretary at the Ministry of Oil and Gas, greenfield industrial projects will take priority over expansion projects because they have a larger impact, and lead to more job creation and downstream developments in the small and medium-sized enterprise sector.

The onshore gas reserves found in BP’s Khazzan and Makarem fields, in Oman’s Block 61, is estimated to hold between 15trn and 30trn cu feet of natural gas, which may provide a necessary lifeline for Sohar’s burgeoning industries. The government and BP reached an agreement in June 2013 regarding the sale price for gas produced from the field.


Petrochemicals is another major industrial sector with its predominant base at the SIE. One of the most notable expansion projects in the works at Sohar is the Oman Refineries and Petroleum Industries Company (Orpic). Its $5bn of investments in new petrochemicals facilities include a $3bn steam cracker and polyethylene plant at the Port of Sohar. Provided that an adequate supply of gas is available and secured from the government, the project should be ready for operation by 2018, according to Orpic’s CEO, Musab Al Mahrouqi. Orpic also plans to upgrade its Sohar refinery with a $1.5bn investment that would increase its capacity by 60,000-70,000 barrels per day (bpd), from its current 220,000 bpd. The Engineering Procurement Construction tender is expected before 2014.

The Sohar Fertiliser Project, a prominent SIE chemical facility operated by Sohar International Urea & Chemical Industries, was completed in May 2009 at a cost of $638m. It is considered one of the largest ammonia-urea projects in the world, producing 1.2m tonnes per annum (tpa) of granular urea. The project site includes one ammonia plant, two granular urea facilities and additional allied units. The majority of urea products are exported on the international market to Australia and Asia.

The Oman Oil Company (OOC) also announced a new petrochemicals project at Sohar, an $800m multi-chemical processing facility. Once in full swing, the operation will be able to produce 1m tpa of terephthalic acid, which is the primary raw material used in polyester fibre, resin and film. The OOC has also built the plant with the capacity to produce the necessary ingredients for plastics products, such as polyethylene terephthalate.


In addition to metals and petrochemicals, Sohar is able to boast the development of Oman’s first sugar refinery, which aims to exploit growing terminal capacity with an increase in agricultural bulk. The Oman Sugar Refinery Company (OSRC), a joint venture between the UK’s Tate & Lyle Sugars and an unnamed Omani group, plans to establish a $200m facility. On 180,000 sq metres of land, it will have the capacity to produce 1m tpa of refined sugar. The first stage of construction was due to take place in late 2013, and the plant should be completed in late 2015. “It is a fairly fast-track project with full production due by the beginning of 2016. We plan to hire 500 employees for the refinery and expect Omanisation to climb to 80-90% within 10 years,” said Ashwin Rana, project director for OSRC. Construction of the plant is to be undertaken by the South African company Bosch Projects.

Tate & Lyle Sugars has been contracted to supply the refinery with raw materials, which will be imported from Brazil, Thailand, India and Australia. Oman currently imports 120,000 tpa of refined sugar for its domestic market, which makes up 100% of consumer demand. Furthermore, it is estimated that there is a 3m tpa shortfall in sugar-processing capacity in the Middle East. OSRC’s new facility would therefore be equipped to satisfy local market demand while also being able to export the bulk of its production throughout GCC and other MENA countries.


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