With more than 3000 km of coastline, a total land area of roughly 300,000 sq km and a pivotal location at the crossroads of East Africa, the Middle East and South Asia, Oman is positioned to capitalise on infrastructure growth both domestically within the broader region.

The sultanate has spent a number of years building up its transportation system, and the next few years will see a significant improvement of its land, sea and air links. Bolstered by greater foreign investment, road and rail projects will help develop a number of multi-modal connections across Oman’s ports, which are also undergoing large-scale upgrades, while new airports should substantially increase the country’s capacity to handle international aviation traffic.


Oman’s 11 governorates are divided into three main regions: the mountainous northern region, backbone of the sultanate’s industrial developments; Muscat, a central and underdeveloped territory characterised by gravelly desert; and the southern Dhofar region, a mountainous coastal strip stretching across Salalah and down to the Yemeni border. Infrastructure development is overseen by the Ministry of Transportation and Communication (MoTC), under three main policymaking divisions: the Public Authority for Civil Aviation, which replaced the Directorate General of Civil Aviation and Air Navigation in 2012; the Directorate General of Roads and Land Transport; and the Directorate General for Maritime Affairs.

Several port authorities, many of which are partially owned by private firms and consortiums, are in charge of various port operations across the sultanate, while the Oman Airports Management Company (OAMC) oversees all airport operations.

Highway infrastructure development has historically faced a number of obstacles, not least Oman’s vast, mountainous terrain, including two non-contiguous territories, Musandam Peninsula and the Wadi Madha area, both located within the UAE.

Delays in airport construction and the award of railway tenders have slowed growth, while excess capacity has cut into profit margins at some of the sultanate’s commercial ports. However, recent upgrades to the transportation network are poised to spur further investment and drive growth.

The government is also working with the private sector to boost shipping activities at ports, while plans for a regional GCC rail project continue to move forward, in tandem with ambitious highway upgrades linking northern Batinah to the central Muscat governorate. Indeed, according to Mohamed Al Yousef, chairman of investment holding company Al Yousef Group, “The railway, airports and ports are ideal environments to develop a large range of service-provider industries that revolve around the projects of small and medium-sized enterprises,“ he told OBG.

Ocean Highways

Oman’s ocean highways are perhaps its most important strategic advantage in terms of transport development. Apart from Musandam Peninsula, the country lies entirely on the Arabian Sea side of the Strait of Hormuz, a 34-km wide passage through which one-third of the world’s oil trade travels. Skirting the strait allows shipping companies to save time and money on long-haul trans-shipments, thereby giving Oman’s ports a geographical advantage as compared to others in the GCC region.

“Travelling to Oman instead of through the Strait of Hormuz saves companies $380,000 in fuel alone, not counting insurance, and shaves three days off the trip. If Oman can achieve the same level of efficiency as other ports in the region, it will be a no-brainer for major shipping companies to make more calls here,” Reggy Vermeulen, commercial director at the Port of Duqm on the south-eastern coast, told OBG.

Oman is also located near the entrance to the Red Sea through a narrow channel traversed by vessels using the Suez Canal, an ideal position from which to capitalise on its historical role as an important trading hub for East Africa and South Asia. With the construction of a new port in Kenya and the revival of container feeders into Mogadishu, the capital of Somalia, Oman’s relationship with East Africa has significant potential for further growth in the future.

Accordingly, the sultanate plans to further enhance services at five of its deepwater ports: Port Sultan Qaboos (PSQ) in Muscat; the Port of Salalah, the sultanate’s largest port and an important player in regional trans-shipment activities; Sohar Industrial Port (SIP), set to become a major commercial container and dry bulk hub; and the Port of Duqm, which is transforming into a major oil and mineral export centre under one of the most ambitious development plans ever launched in the sultanate (see Regions chapter).

Swing Port

Located in the far south, Salalah has grown in the last two decades to become a significant player in trans-shipment activities, and is expected to evolve further into a multimodal transport centre, with air, road and rail links to local and global markets. Salalah is located only 180 nautical miles from the global shipping lanes connecting Colombo, the Red Sea and the Suez Canal. Salalah is therefore perfectly situated to capitalise on growing East-West trade activity. As the largest and fastest-growing port in the sultanate, it is now vying with Jebel Ali in Dubai to become the most important port between Rotterdam and Singapore. “With support from the government the logistics sector can be properly developed to the point where Oman can leverage its strategic geographical location as transshipment and trading hub for the region,” Tarik Al Junaidi, deputy CEO of Oman Shipping, told OBG.

Located 15 km away from the city, the Port of Salalah is spread over 87 ha of land and boasts facilities including 25 ship-to-shore gantry cranes, 68 rubber-tyred gantry cranes and four mobile harbour cranes. With a maximum annual capacity of 5.8m twenty-foot equivalent units (TEUs) and over 2150 employees, the port is the largest logistical development in the sultanate.

Operations at the port have been cited as an example of a successfully executed public-private partnership (PPP). Under this arrangement, the government holds a 20% stake in the publicly listed Salalah Port Services Company, which is operating the port under a 30-year concession, while the AP Moller-Maersk Group holds 30% equity in the port through its subsidiary, APM Terminals. An additional 21% of the company is in the hands of institutional investors, with 29% held by pension funds and private investors. The port is widely considered to be the most efficient in the sultanate, with an average of 72 moves per hour in 2012, compared to 40 in Port Qaboos. Activities at Salalah have seen huge increases since 2000, according to Amar Akaak, the acting CEO of the Port of Salalah. “The Port of Salalah contributes $70m to the city’s local economy annually. It has grown 600% in the past 14 years in both container traffic and general cargo, so it puts Oman on the map,” Akaak told OBG.

Salalah was ranked sixth in the world as a trans-shipment port, and the 18th top port globally, in a study by the trade magazine Journal of Commerce on port productivity published in July 2013. As per port data, there are more than 3000 vessel calls per year, with Salalah connected directly to 54 other ports. The Port of Salalah saw a 13.1% growth in container volumes in 2012, reversing a fall of 8.2% in 2011, with further positive developments witnessed in 2013. Total cargo volumes at the Port of Salalah rose to 5.26m tonnes by the end of August 2013, from 4.7m tonnes during the same period in 2012, an increase of 11.8%.

Bulking Up

The Omani government is mindful of the need to increase capacity and diversify port activities as the worldwide shipping industry struggles with some of the lowest profit margins since its pre-crisis peak in 2008. The Port of Salalah is currently undergoing a significant expansion project, which will add some 4m TEUs of handling capacity through the construction of a new cargo terminal, three new berths alongside the existing breakwater, a new breakwater with a dedicated cruise terminal, and dry and bulk liquid jetties.

The new jetties should be completed in April 2014, and although the construction of the new berths was delayed for five years as a result of the global financial crisis, they should be finished by 2016. The government is also considering land reclamation to expand the port’s storage and shipping capacity, and analysts have estimated that the Port of Salalah could reach an annual capacity of approximately 18m TEUs in the next 20 years, nearly on par with the UAE’s Jebel Ali.

In the short term, a global industry shake-up is expected to impact Salalah’s activities in 2014. In August 2013 AP Moller-Maersk became part of the P3 Alliance, a mammoth shipping partnership created when Maersk Line, MSC and CMA CGM agreed to share vessels on their Asia-Europe, trans-Pacific and transatlantic trade routes starting in the second quarter of 2014. A total of 255 ships will be operated in 29 loops, with a combined capacity of 2.6m TEUs.

“The P3 Alliance will ensure a minimum size for every call, which will in turn reduce excess capacity. It is a shakeup; there will be big winners and losers, but it will also streamline the industry,” said Akaak.

Joint Ventures

Located just south of the Strait of Hormuz, SIP is an integrated deepwater industrial port covering 6300 ha, with a maximum draught of 18 metres. In addition to hosting petrochemicals, logistics and medical clusters, Sohar is undergoing a development project that has already attracted $12bn of investments, making it one of the largest such projects in the world. Sohar itself is also home to a free zone, an industrial zone and an airport project, together making up Gateway Sohar, an extremely large multimodal hub set to grow further in 2014. SIP is a 50:50 joint venture (JV) between the government of Oman and the Port of Rotterdam. The port is operated by Sohar Industrial Port Company (SIPC), and holds International Ship and Port Facility Security (ISPS) certification. In 2011 a temporary bulk terminal facility was built to accommodate vessels with up to a 16-metre draught, and plans to build a permanent facility are included as part of Sohar’s massive redevelopment programme.

In March 2013, SIP’s Oman International Container Terminal, a JV between the government and a consortium of private companies and investors including Hutchinson Port Holdings, awarded a $30m contract to China Harbour Engineering Company to upgrade Terminal C, a 15-month project which will involve construction of a 1000-metre quay wall, 29-ha stackyard, and fire fighting, water supply, drainage and communication facilities, in addition to three new post-Panamax quay cranes and 14 rubber-tyred gantry cranes. These upgrades, coupled with SIP’s deepwater availability, will allow the port to increase the size of the container vessels it serves to a maximum of 9000 TEUs. Investment in this segment of port expansion, which will raise the terminal’s capacity from its current 800,000 TEUs to 1.5m TEUs by the end of 2013, will be worth a total of OR50m ($129.5m), according to the SIPC.

A number of agents are already operating in SIP, including Maersk, Sharaf Shipping Services, Transworld Shipping and Trading & Logistics Services, with many more expected to follow suit. In July 2011, Sultan Qaboos bin Said Al Said announced that all commercial shipping activities at PSQ in Muscat would be transferred to Sohar, allowing PSQ to function as a dedicated tourism port for cruise ships.

The move is expected to relieve congestion at Muscat, opening the port to a higher number of cruise ship passengers as the sultanate pursues significant investment in the tourism sector under the Vision 2020 economic diversification plan (see Tourism chapter). In October 2013 the MoTC announced that commercial shipping operations would end at PSQ as of August 31, 2014, with operators expected to finish transferring their operations to Sohar before January 2015.

The decision has been met with mixed feelings by operators. “Moving shipping activities to Sohar will improve operational efficiency, as well as allow for future upgrades. At the same time, operators may incur additional costs in the short to medium term, because cargo will need to be trucked overland to Muscat, which is still the epicentre of wholesale and retail markets in Oman,” Vasudevan Vijayaraghavan, country manager for shipping group Maersk, told OBG.

Long-term changes will allow Sohar to substantially expand its activities, although the port is already performing well. Total cargo volumes handled by the port jumped 51% to reach 43.94m tonnes in 2012, from 29.13m tonnes a year earlier, with growth in container traffic increasing 83% to reach 198,817 TEUs in 2012. Roll on/roll off cargo, made up of automotive imports, rose 69% to 73,548 units in 2012, from 43,623 units in 2011, while dry bulk volumes were also up 78% to 26.12m tonnes in 2012, buoyed largely by shipments of iron ore for Vale’s pelletising plant.

Attracting Investment

The fishing village of Duqm is also expected to be transformed into a significant logistics hub in the coming years, as the government develops the Port of Duqm into a major oil and minerals export facility. Located 450 km south of Muscat in the Wustah governorate, Duqm is the newest addition to Oman’s maritime trade facilities. The government envisions turning Duqm into a major international business hub on the back of its port activities, launching the Port of Duqm project in 2000, with construction commencing in 2007. The Port of Duqm Company (PDC), a 50:50 JV between the Omani government and the Consortium Antwerp Port (CAP), is responsible for the management and operation of all port activities under a 28-year concession signed in April 2011. The company is additionally responsible for navigation in and around the port, as well as the wider bay of Masirah.

A 4-km, $1.5bn dry dock, the second-largest in the Middle East, has already been constructed, and a 177,000-ha special economic free zone is also under development. Surrounding the free zone will be a petrochemicals factory, refinery, airport, beachfront hotels and housing for 100,000 people. Using Duqm as an export hub is expected to advance the government’s efforts to diversify the economy. The PDC is focused on attracting investment to the port and free zone, in conjunction with the Special Economic Zone Authority Duqm, which has already leveraged $1.75bn in investments for free zone development (see analysis).

Investment has seen considerable progress so far: the UAE’s Richmond Group is set to construct a bitumen terminal at Duqm, and in July 2013 the PDC signed an agreement with Raysut Cement, the sultanate’s largest producer, to construct a cement distribution terminal at the port. This comes on top of various agreements, with the Duqm National Development Company to provide marine and navigation services, with Masirah Oil to lease storage areas and a terminal for oil vessels, and with offshore oil helicopter company Euro-Gulf Services to provide daily logistical support to Masirah’s marine platform. In October 2013 the PDC announced that mineral exports would commence by the end of 2013, which will kick-start mining activity in the area.

Cruising Along

Formerly the sultanate’s largest commercial shipping port, PSQ in Muscat will soon transform into a tourism hub, with commercial shipping activities set to transfer to Sohar by the end of 2014. In May 2013, the government unveiled a master plan for port development in Muscat, which will increase the number of cruise ships making calls at the port. Under the plan, the port will retain one commercial terminal to handle cereal vessels working with the Oman Flour Mills Company, as well as temporarily continuing to receive liquid tar, sheep, fishing, food oil and cement vessels. PSQ will, however, undergo a layout transformation, hosting marinas for yachts, cruise ships and boats, with existing terminals set to be revamped, and new terminals for third-generation cruise ships slated for construction. The new layout also includes hotels, yards and recreational centres (See Tourism chapter).

There is good reason for this shift in tourism: cruise ship calls at PSQ grew from 24 vessels and fewer than 8000 passengers in 2005 to 111 vessels and 183,449 passengers in 2012. At the same time, cargo volumes have risen, reaching 3.55m tonnes of cargo between January and August 2013, up 3.8% over 3.43m tonnes during the same period in 2012. Moving this freight to SIP should thus offer significant competitive advantages to both ports. Some analysts also point to the challenge of enhancing freight transportation. “Container freight stations (CFS) are limited to the ports. The addition of a railway in Oman will create the need for more CFSs to be constructed,” Turgay Sarıkaya, country manager for global shipping group DHL Express, told OBG. “When this happens we can expect additional multinational logistics companies to invest in Oman,” he added.


As the government moves to create a series of multimodal transport hubs across the sultanate, while simultaneously increasing tourism revenues and international visitor numbers, airport developments are at the forefront of Oman’s infrastructure overhaul. Airports in Muscat and Salalah are currently undergoing expansive upgrades that will have a significant impact on passenger numbers and tourism growth, while the government moves forward on several greenfield airport projects at strategic locations across the sultanate. Investment in aviation projects is due to reach $6.1bn by 2015, representing the largest part of Oman’s budgeted investments and totalling nearly 40% of all spending in the state’s eighth five-year development plan. While 8% of funds are earmarked for the completion of four regional airports, 92% has been allocated for the Muscat and Salalah airports.

Muscat International Airport, called Seeb International Airport prior to 2008, was opened in 1973 on an old military airstrip. It is currently constrained by capacity limitations, which are expected to be alleviated as part of the government’s Vision 2020 economic diversification plan, with aims to attract some 12m passengers to the sultanate annually by 2020. Passengers landing in Muscat will notice the skeleton of a new airport terminal rising out of the sand, one segment of an airport redevelopment project that will enable the facility tomeet ever-increasing passenger and cargo demands.

“Muscat International Airport continues to experience double-digit growth, especially in the cargo segment, where it is operating above capacity. The new terminal will increase cargo capacity, as well as accommodate 12m passengers annually,” Vic Allen, acting CEO of OAMC, told OBG. According to the OAMC, the airport saw strong growth in 2012, with total passenger numbers reaching 7.55m, a 16.5% increase over 6.48m passengers in 2011.

The year 2013 has also proven to be a busy one for the airport, with total passenger numbers up 10.3% between January and August to reach 5.53m, compared to 5.01m in the same period in 2012. According to Allen, more than 8m passengers are expected to pass through Muscat International Airport in 2013.

Handling Capacity

Cargo activity has also witnessed significant growth, with cargo volumes at Muscat International rising 14.6% in 2012 to reach 113,269 tonnes. Despite operating above capacity in terms of cargo handling in 2012, the airport nonetheless saw an increase of approximately 4% between January and August 2013, with total shipments reaching some 78,746 tonnes compared to 75,600 tonnes during the same period in 2012.

The airport upgrade will considerably expand both cargo and passenger capacity. In addition to a second runway with a length of 4000 metres and a cargo terminal able to handle 260,000 tonnes annually, the new terminal building, stretching out over 334,995 sq metres, will have 29 boarding air bridges, 10 bus-boarding lounges, 30 remote aircraft stands, 86 check-in counters and 20 self-service counters. Expansion stages have been phased to accommodate 24m passengers each year, with the intention of reaching an annual capacity of 36m and then 48m in two later stages. However, construction delays have caused the postponement of the airport’s scheduled opening from 2014 to late 2015. The extended timeframe can be partially attributed to supply chain difficulties – for instance, in March 2013, the Atlantik Confidence, which was carrying 30,000 tonnes of steel structures for Muscat’s airport construction, sank en route to Oman.


In terms of operator growth, Oman is becoming increasingly attractive to new players in the aviation industry. A number of operators have entered the market in recent years, including low-cost carrier (LCC) IndiGo in 2011, United Airways from Bangladesh in 2012 and the Indian carrier SpiceJet in August 2013. In July 2013, Philippines Airlines announced plans to launch services to Muscat starting in 2014, while in April 2013 the sultanate’s national carrier, Oman Air, entered into a codeshare agreement with Ethiopian Airways, allowing the companies to offer four weekly flights between Muscat and Addis Ababa. Cargo growth is also set to increase, after two cargo operators entered the market in 2013: DHL in March and Cargolux in June.

Oman Air posted $253m in losses in 2012, owing largely to fleet investments that will see two new Airbus 330s and six Boeing 787 Dreamliners enter into service in the next five years. In April 2013, the firm announced it was considering launching a LCC and cargo airline, hoping to capitalise on LCC growth in the sultanate. The government, Oman Air’s sole shareholder, has agreed to the proposal in principle, and a feasibility study is now under way.

The sultanate’s aviation industry is taking tentative steps towards market liberalisation, after Oman Air signed an open skies agreement with the US in July 2013. According to this arrangement, airlines from both countries will be permitted unrestricted air service, eliminating government restrictions on how often carriers fly, what types of aircraft are used and what prices are charged. The government has also signalled its intention to eventually privatise Oman Air, and although no specific timeline has been announced, details are most likely to emerge when the nationwide privatisation master plan is released in 2014.

Salalah Airport

As the sultanate’s second-largest airport, Salalah Airport will see passenger activity continue its steady rise as the government and private sector move closer to completing a massive airport upgrade. Salalah Airport started operations in 1977, initially only serving domestic flights from Muscat.

International flights began when Oman Air started offering flights from Dubai to Salalah, with LCC flydubai adding Salalah to its flight schedule in May 2013, and Oman Air increasing service frequency to Salalah in August 2013, to meet rising demand during the khareef monsoon season, the busiest time of year.

Today six international carriers fly to Salalah, including Air Arabia, Air India Express and Qatar Airways, with German travel firm FTI Group introducing charter services in April 2013. Salalah’s growing popularity is reflected in passenger numbers, which went up by around 17.6% between January and August 2013, reaching 492,000, up from 418,000 during the same period in 2012. Passenger numbers also showed significant growth in 2012, rising to some 629,000 from 513,278 back in 2011, an increase of 22.5%.

Salalah Airport is undergoing a major expansion, with a new terminal under construction on the airport’s northern side. The facility will expand the airport’s annual capacity to 1m passengers. Parallel taxiways 4000 metres in length are also planned, as well as parking for almost 2000 vehicles. Construction contracts worth $765m were awarded to a JV between Larsen & Toubro India and Galfar Engineering in 2011, which will build the new passenger terminal, an air traffic control tower, and eight ancillary buildings, roads and bridges.

Regional Facilities

In addition to ongoing expansion at Salalah and Muscat, the government is also moving forward on four regional airport projects in Sohar, Adam, Ras Al Hadd and Duqm. While Duqm Al Jaaluni Airport partially opened in 2010 and is expected to be complete in 2014, the three remaining regional airports are still in the development stage.

In September 2013 the government announced it was re-tendering construction contracts at all three airports, after a two-year design review had allowed for significant cost reductions. According to the MoTC, the airports will share a uniform layout, with each terminal to be built across 5000 sq metres, providing sufficient space for restaurants and retail outlets. Baggage conveyor systems, passenger air-bridges and state-of-the-art air navigation facilities will also be standard features at each facility.


Infrastructure development has clearly been identified as the lynchpin to overall economic progress in Oman. The government is therefore planning bold new steps towards constructing and improving transportation networks, with the goal of establishing a range of multimodal transport hubs across the key areas of Muscat, Sohar, Duqm and Salalah.

Private sector participation will be critical in rolling out new projects; port and road developments (see analysis) are poised to see enormous investment as the sultanate moves to tie its land, air and sea links together, offering attractive new opportunities to local and foreign firms. Challenging geography and project delays have caused frustration, but the government has shown a clear commitment towards executing its vision to transform the country into a leading regional transport hub. By capitalising on its prime location and enacting these ambitious development plans, the sultanate is well placed to expand its activities and influence within both the GCC region and beyond in the years to come.