Industry

BUILDING CAPACITY
In ancient days, Oman, then known as Majan, was at the forefront of international maritime trade as Omani dates, traditional handicraft and fragrances were very popular in Africa, Middle East, Europe and Asia. With the discovery of hydrocarbon reserves in the 20th century, like rest of the other Gulf states, Oman’s economy shifted focus to the oil and gas sector. However, with the increased stress on diversification of the economy, Omani products across different categories are again coming to the fore and gaining wider acceptability in the international market.

The strong growth recorded by the manufacture of non-oil products has been one of the most impressive aspects of the country’s macroeconomic performance in 2007. According to gross domestic product (GDP) figures up to June 2007, all industries in Oman have grown significantly. The most impressive has been the refined petroleum products sector that has grown by 767 per cent over the corresponding period in 2006. The mining and quarrying sector has gone up by 51.7 per cent and construction by 21.6 per cent.

On the steps taken during the year to boost industries in Oman, HE Maqbool bin Ali Sultan, Minister of Commerce & Industry, said: “The ministry has done a survey of over 168 installations to have a clear idea on their real conditions and we found that 46 per cent of them were doing well whereas 32 per cent are currently in trouble, in addition to 18 per cent that may face trouble in the future. The poor performance of these companies may be attributed to poor management system, lagging in taking investment decision, poor marketing initiatives and inability to develop their products to meet the tough competition at the market. We have taken a number of measures to help the stumbling companies introduce some corrective measure. We also organised a number of seminars and workshops to raise the awareness of investors.”

The growth of exports of non-oil/gas products of Omani origin has been outstanding this year. The value of non-oil/gas Omani origin exports touched RO469.2 million ending May 2007 as against RO258.1 million during the same period in 2006, registering an impressive growth rate of 82 per cent. The best performing product categories include mineral products (406.8 per cent growth), electrical machinery, mechanical equipment and parts (155.3 per cent growth), base metal and articles (15 per cent growth), articles of stone, plaster, cement and ceramic products and glassware (14 per cent growth) and live animals and animal products (13.5 per cent growth).

Oman is set to cross the RO1-billion-mark in non-oil/gas exports in 2007 riding on the growing popularity of ‘Made in Oman’ products. The Omani Centre for Investment Promotion and Export Development (OCIPED) has set out an export target of RO2 billion for non-oil/gas Omani origin products by 2010.

To promote industries in Oman, the government has made strategic investments in the companies and is building up the infrastructure conducive to the growth of industrial ventures. This has attracted foreign investors and private sector players to increase their ante in Omani industries. Large industrial ventures, including Oman India Fertiliser, Sohar Refinery, Oman Polypropylene and Oman Methanol, have initiated commercial production. The $969 million-Oman India Fertiliser project has already started generating significant revenues by exporting products to India.

The US$1.2 billion-Sohar Refinery, which started operation last year, is ensuring production of refined petroleum products and providing feedstock for many petrochemical ventures in Sohar. Its major products include propylene, LPG, straight run naphtha, regular unleaded gasoline, premium unleaded gasoline, aviation fuel, diesel, fuel oil and sulphur.

The refinery has led to a new era of growth in the downstream oil activities in Oman. Its optimum production of 327,000 tonnes per year serves as feedstock for the polypropylene project of Oman Polypropylene. Oman Petrochemical Industries Company’s (OPIC) world-class plant will produce 1 million tonnes of high quality polyethylene per annum to generate an annual turnover of US$1 billion. The OPIC project is a 50:50 joint venture of Oman government and Dow Chemicals.

The petrochemical complex, located in the Sohar Industrial Port Area, comprises feedstock production facilities, a gas cracker, as well as three world-scale polyethylene production units based on state-of-the-art catalyst and process technology. The joint venture is expected to facilitate the development of downstream industries in Oman that will convert polyethylene to end-products. The first petrochemical project that went on stream in Sohar was a polypropylene project – a significant industry that enhances non-oil exports. The Oman Polypropylene, jointly promoted by Oman Oil Company, Bahrain based Gulf Investment Corporation and LG International, was set up with a capital expenditure of $313 million. The project has an installed capacity of 340,000 tonnes per annum of polypropylene in pellets form, for a variety of applications. OPP has an off take agreement with LG International for selling its products. Most of the output of OPP is for the overseas market, with the remaining quantity used locally by ancillary industries. Polypropylene is used to produce several items such as food packages, flower wrapping, furniture, bottles, just to name a few.

Another petrochemical venture that started shipment is Oman Methanol Company (OMC), which has a capacity to produce 3,000 tonnes per day. OMC is jointly owned by Methanol Holdings (Trinidad) Limited, Omar Zawawi Establishment, and MAN Ferrostaal AG. The company has an off take agreement with HELM AG. Apart from becoming increasingly important as a very flexible energy source and as a co-component for bio-diesel, methanol is a key chemical intermediate for several industrial chemicals, including polyesters, acrylics and formaldehyde resins.

Sohar International Urea and Chemical Industries, another gas-based venture promoted by private entrepreneurs, is set to commission its plant in January. With an estimated capital expenditure of $638 million, the project will use natural gas as feedstock to produce 2,000 tonnes of ammonia and 3,500 tonnes of granular urea per day. Granular urea will be exported globally under a long term off take agreement already entered into with the US-based Transammonia Inc.

Sohar Aluminium Company (SAC) is considered as one of the largest industrial ventures that will change the face of Sohar. With an investment of roughly $2.3 billion, it is considered as the single biggest industrial undertaking in the Sultanate. SAC is backed by Oman Oil Company (OOC) and the Abu Dhabi Water and Electricity Authority (ADWEA), which have a 40 per cent stake each, with Canada-based Alcan Inc holding the remaining 20 per cent. The 325,000 tonne per annum aluminium smelter is coming up at a sprawling site adjacent to the existing Sohar Industrial Area.

Sohar Aluminium is building a single AP35 potline, together with associated carbon and casting facilities and a 1000MW-gas fired power station. The company will be the first smelter in the world to pioneer use of “best-in-class” Pechiney AP35 technology. Alcan will provide the smelting technology and technical assistance, besides serving as the metal offtaker. The project, which is expected to contribute 2 per cent to the country’s gross domestic product (GDP), will have significant socio-economic benefits for the Sultanate. Roughly 35 per cent of the estimated 1,000 direct jobs envisaged at start-up will be set aside for Omanis – a figure set to rise to 60 per cent of the workforce after five years. In addition, some 4,000 indirect jobs will be created as a result.

Another significant venture is Shadeed Iron & Steel, which is building an integrated steel complex at the Sohar Industrial Port. This is a project that has the potential to catapult the Sultanate into the select ranks of steel-producing nations. Backed by UAE-based business house Al Ghaith Holding, the company will initially invest around $350 million in the construction and management of a world-class steel plant. Investments could total as much as $750 million when subsequent phases are implemented, leading to the creation a giant facility rivalling in size plants already in operation in Saudi Arabia and Qatar. In the first phase, Shadeed Iron & Steel is building a plant designed to produce around 720,000 tonnes of hot briquetted iron (HBI) including 500,000 tonnes of steel billets.

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