A significant portion of economic activity in Oman is concentrated in the country’s capital and nearby surrounding areas. A number of other regions in the sultanate, however, remain key drivers of economic growth and are playing an increasingly important role as the national economy matures and diversifies. Most notably, these areas include Sohar, Salalah and Duqm. “One must recognise the important relationship between the three industrial areas of Sohar, Duqm and Salalah,” Andre Toet, the CEO of the Port of Sohar, told OBG. “These can create a complementary network in Oman.”

An Emerging Hub

An emerging economic hub north of the capital in the Batinah region, Sohar is about a three hours’ drive up the coast from Muscat. The city has an expanding population and is home to a seaport, a free zone and an industry area. According to the most recent official population estimates released by the Ministry of National Economy (MoNE), there were around 140,000 people living in Sohar in 2010. This is up from roughly 125,000 residents in 2008.

Sohar’s location provides it with a number of advantages. The city offers shipping firms a seaport south of the Strait of Hormuz, which reduces operational costs incurred by heavy congestion through the channel, and is far more segregated away from geopolitical volatilities. At the same time, its close proximity to the capital enables relatively quick transport between the two cities. These connections should be improved as several road works projects are completed. There is at present only one road connecting Sohar with Muscat, though three ground links will eventually stretch between the two cities: the current road, a coastal road and an expressway expected to be completed by 2014.

Much of the city’s development can be attributed to the rise of its deepwater seaport, the Port of Sohar. With construction beginning in the late 1990s, the port became operational in 2004 and has a draft of 18 metres. Roughly $14bn has been invested into the port’s infrastructure along with that of the accompanying Freezone Sohar, according to recent figures provided by the port. Set up in 2002, the Sohar Industrial Port Company (SIPC) manages the Port of Sohar and is a 50:50 joint venture between the Port of Rotterdam in the Netherlands and the Omani government. Shipping through the port focuses on products in the upstream phase of production. These can be roughly divided into two clusters: metals and petrochemicals.


Shipping volumes at the Port of Sohar has increased substantially in recent years. The port reported that dry bulk grew by over 400% between 2010 and 2011, from around 2.8m freight-registered tonnes (frt) in 2010 to over 14.6m frt the following year. Liquid bulk also increased notably from roughly 7.7m frt in 2010 to about 12.8m frt in 2011—a rise of over 65%. The number of vessels calling at the Port of Sohar jumped nearly 34%, from 1110 twenty-foot equivalent units (TEUs) in 2010 to 1487 TEUs the following year. Although less dramatic, container traffic rose by 7%, from around 101,000 in 2010 to more than 108,000 in 2011.

The Port of Sohar is currently working to increase infrastructure in order to accommodate rerouted cargo and container traffic from Port Sultan Qaboos (PSQ) in Muscat. The Ministry of Transport and Communication (MoTC) and the Ministry of Tourism (MoT) announced in mid-2011 that PSQ would be transformed into a tourism port. While no date has been set for the closure of PSQ’s industrial operations, traffic is already being redirected to Sohar and the Port of Salalah.

New Facilities

One recent development at the port was the inauguration of the Sohar Bulk Terminal for the handling of dry materials. A company formed between SIPC, the Muscat-headquartered Khimji Ramdas and TM International, a subsidiary of India’s Tata Steel is operating the new terminal. A temporary berth will handle a variety of bulk material imports and exports, including clinker, gabbro, laterite, limestone and coal. This will be replaced with a permanent terminal, scheduled to be completed by mid-2014. An important component of the Port of Sohar’s continuing growth is its nearby free zone. The project is managed by SIPC and owned by the Sohar International Development Company, a joint venture between the Omani government, the Port of Rotterdam and India-based SKIL Infrastructure.

Operations at Freezone Sohar and the Port of Sohar are complimented by the Sohar Industrial Estate (SIE). Stretching over 21.6m sq metres, the SIE is managed by the Public Establishment for Industrial Estates, a government institution formed in the early 1990s to develop and manage several industrial properties.

Aluminium Ambitions

Another major firm operating at the SIE is Sohar Aluminium, a joint venture between Omani Oil (40%); TAQA (40%), an energy firm largely owned by the government of Abu Dhabi; and Rio Tino Alcan (20%), an international mining firm. Set up in 2008, Sohar Aluminium produces 360,000 tonnes per annum (tpa) of aluminium. In addition to its smelter facility, the company owns a 1000-MW power plant and a facility at the Port of Sohar capable of handling vessels that have a capacity of up to about 75,000 tonnes.

The firm is also working to increase the availability of skilled labour by providing vocational training. Most recently, the company has taken steps to expand training opportunities for women. In mid-July 2012 the company signed a memorandum of understanding with the Public Authority for Craft Industries, a government body set up in 2003 to facilitate craft industries in Oman through training and qualification.


Sohar is also home to a growing petrochemicals cluster. A relatively new entrant to the SIE, Oiltanking Odfjell Terminals (OOT) set up facilities in 2006 and is a joint venture between Oiltanking Odfjell Oman and the Oman Oil Company (OOC). The firm maintains 66 oil tanks and 6 berths, with two more berths under construction. These should be completed during the first quarter of 2013.

The Oman Refineries and Petroleum Industries Company (ORPIC) is one of the larger firms operating out of Sohar’s petrochemicals cluster. The company manages four plants, which include two refineries, an aromatics plant and a polypropylene facility. With the exclusion of one of its refineries, all of ORPIC’s plants are located at the SIE. The company’s refineries operate with a combined capacity of 222,000 barrels of crude per day, while ORPIC’s polypropylene facility maintains a capacity of 350,000 tonnes of polypropylene pellets.

The firm’s aromatics plant is able to produce as much as 198,000 tonnes of benzene and 818,000 of paraxylene per annum, according to data provided by ORPIC.

While developments at the SIE, Port of Sohar and Freezone Sohar are all progressing smoothly, efforts are under way to cluster the three into a single economic zone, a concept known as “Gateway Sohar.”

The Gateway 

Infrastructure expansion, such as the new Sohar Airport, plays an important role in the formation of Gateway Sohar. Currently all commodities transferred through Sohar must either come by road or sea; however, the airport will provide companies with more options. Perhaps most notably, the facility will create new opportunities for firms transporting high-value and perishable products such as food or flowers. Construction on the runway has been completed, and the airport is scheduled to open in 2014.

About 1000 km to the south-west of Muscat, Salalah is the capital of the Dhofar region and an emerging economic hub. According to the most recent official population estimates released by the MoNE, there were about 172,000 residents in Salalah in 2010, with Omanis making up over 60% of the population. The main economic drivers are shipping, tourism and industry.

At the heart of the growing economy is the Port of Salalah, Oman’s largest seaport and among the 30 biggest container ports in the world. Incorporated in 1997, the port is a joint venture between APM Terminals (30%), a Danish shipping and logistics firm; pension fund holders as well as individual private investors (29%); the Omani government (20%); and institutional investors (21%). With almost 2200 employees, the Port of Salalah is the Dhofar region’s largest employer, according to data provided by the port.

A key trans-shipment hub in the region, the Port of Salalah is divided between a container terminal and a general cargo terminal. The Port of Salalah’s value as a shipping and logistics hub has been enhanced with the addition of the Salalah Free Zone (SFZ). Established in 2006, the SFZ covers 18 sq km which is divided into two major plots next to the port, according to the SFZ.

Ownership & Benefits 

The area is operated by the government-owned Salalah Free Zone Company. Investors choosing to operate out of the free zone are exempted from all taxes and are not limited by import restrictions. Full foreign ownership as well as a one-stop-shop licensing process are also benefits. One firm operating out the free zone is OCTAL Pharmaceutical, a polyethylene terephthalate (PET) resin manufacturer, a lightweight plastic used to package a range of consumer products including food and beverages. The firm manages two manufacturing plants on a 10-ha piece of land and plans to add two more facilities. With an expected investment of $200m, OCTAL reported in 2011 that the expansion should increase production capacity to 927,000 tonnes of PET bottle-grade resin per annum. Construction was finished in July 2012.

Other major industrial firms operating in the SFZ include Salalah Methanol Company, Deutsche Post DHL and Dunes Oman, a manufacturer of truck components and brake parts. Another manufacturing plant should be built at the free zone shortly. A 50:50 joint venture between Zawawi Minerals, a subsidiary of the local Zawawi Group, and US-based building materials manufacturer USG Corporation is constructing a wallboard plant at the free zone near a gypsum mine.

According to Zawawi Minerals, the facility should operate with a production capacity of 200,000 tonnes of plaster of Paris and 8m sq metres of gypsum board per year over the course of its first phase. Production capacity of gypsum board could increase to as much as 16m sq metres. Operations are scheduled to begin during the fourth quarter of 2013.

While the industry and transport sectors continue to expand in Salalah, the area is also attracting greater numbers of tourists. Each year in the summer, Salalah and surrounding areas in the Dhofar governorate, experience a cool, wet monsoon season known in Arabic as khareef. The month-long Salalah Tourism Festival (STF) is held to celebrate the cool weather, and the event brings in large crowds of visitors. According to July 2012 MoT figures, over 31,000 tourists travelled to Salalah during two weeks in late June and early July 2012. This is up from 28,000 visitors during the same period in 2011, representing growth of more than 10%. Over 80% of these tourists came from GCC area countries.

Low-cost UAE-based Air Arabia launched new direct flights between Sharjah in the UAE and Salalah in late 2012, just after the start of the year’s annual STF. Another firm, Switzerland’s Orascom Development, opened a 64-room five star hotel, the Juweira Boutique Hotel, in Salalah in June 2012.


Oman’s third emerging economic hub is the port town of Duqm. Located in the central Al Wusta region, Duqm is roughly 550 km to the south of Muscat, and while the town is relatively small, it has a rapidly growing population. In recent population estimates, the MoNE reported the number of residents in Duqm had jumped by almost 120% in two years, from around 5100 people in 2008 to more than 11,200 in 2010.

The bulk of economic activity in Duqm focuses on the industry and transport sectors, both of which are expanding rapidly. The Oman Drydock Company (ODC), for example, began fully operating its ship repair and dry dock facilities in June 2012. Korea’s Daewoo Shipbuilding and Marine Engineering Company manages and operates ODC, which was launched in 2006 and is entirely government-owned. The firm has constructed two docks and each stretch 14.5 metres in height. The larger dock measures 410 metres by 95 metres and provides a 600,000 deadweight-tonne (dwt) capacity. Moderately smaller, the other dry dock is 410 metres by 80 metres and offers a dwt capacity of 500,000. A floating dock, which would add 80,000 dwt capacity to the yard, is in planning stages, according to ODC data.

“The ODC is a diversified operation that is adding another qualitative pillar to the national economy,” Sheikh Khalil bin Ahmed Al Salmi, the deputy CEO of ODC, told OBG. “It is breaking ground in a new sector in a new location and will help spread social and economic wealth in the Al Wusta region.” Capable of handling some of the world’s biggest tankers, the firm’s yard includes more than 1.27m sq metres of land and roughly 1.14m sq metres of sea. ODC reports its five quays measure over a combined 2800 metres. The company has also built a sludge and slop treatment facility and a range of workshops providing machining, electric, painting, pipe-fitting and hull processing services.

By Sea & Air 

The Port of Duqm and the Duqm International Airport (DIA) are additional key factors in the town’s economic growth. The seaport will handle general and bulk cargo as well as containers and will be operated by the Port of Duqm Company, a 50:50 joint venture between the Omani government and Belgium’s Antwerp Port Consortium. With the first phase scheduled to become operational in 2013, the total port area measures 197 sq km (60 sq km of land), and a rentable port-related industrial area measuring 6000 ha will also be developed, according to port officials. “The government needs to fast-track transport infrastructure facilities, particularly airport and rail in order to create better flow in and out of Duqm and a more conducive business environment,” Ibrahim Sultan Al Hosni, deputy CEO of Duqm Development Company, told OBG.

The Special Economic Zone Authority at Duqm (SEZAD) reports that an initial eight berths will be available with alongside depth of 18 metres. A wide commercial quay at the port will measure 2.25 km in length, and a 1-km quay is also being built to accommodate government ships and ferries. A 10-km quay and a number of liquid jetties are planned for the port’s second phase, according to data from the Port of Duqm.

Duqm’s local economy will continue to expand with the construction of a planned oil refinery. Abu Dhabi’s International Petroleum Investment Company (IPIC) and the OOC formed a 50:50 joint venture company in June 2012 that will own and operate a refinery scheduled to be finished by 2017. The facility should have a production capacity of 230,000 barrels per day, while a second phase focusing on the development of a petrochemicals complex is also currently in the pipeline.

A feasibility study conducted prior to the establishment of Duqm’s economic zone reported that over the next 20 years, the area will contribute 5% to Oman’s overall GDP and create 140,000 new jobs. Duqm’s population is also expected to grow by 20,000 people over the same period, according to SEZAD. The authority has noted that while Duqm will likely play an instrumental role in Oman’s total economic growth, the town’s key contribution will be to diversify the national economy.


Transport, logistics and industrial activities are expected to continue to be major drivers of growth, though numerous power and water projects scattered throughout the sultanate and the GCC rail project will boost development as well. Sohar, Salalah and Duqm all vary in terms of their current development and pace of growth, but each has its own economic strengths that combine to create continued overall expansion.