Though the quiet Sultanate of Oman may not make international headlines very often, the good things happening at its ports will have positive implications both domestically and internationally. The majority of the benefits will no doubt be economic, but we are likely to witness political reverberations as well.
A significant factor is Oman’s strategic location. Situated roughly halfway between India and the Suez Canal on the Saudi Arabian peninsula, Oman provides a convenient transit port for cargo heading along the main Asia-Europe shipping lanes. For example, the Port of Duqm requires a mere 200 kilometer diversion from the shipping lanes, whereas Dubai, a much more well-known port, is over 2,100 kilometers away.
The Port of Duqm has also managed to attract huge investment from the Oman Oil Marketing Company (OOMCO), which is keen on setting up an enhanced hydrocarbon and petrochemical industrial center in the area. With oil-based products being Oman’s top exports, this will help to spur domestic growth and employment, while providing a more convenient energy source for fuel-hungry countries in East Asia.
In relation, crane productivity at Oman’s largest port in Salalah has increased by double digits, while truck and gate turnaround times have been cut by 50 percent. The local government has likewise increased spending on water, rail, and road infrastructure, and the nearby Salalah airport and free economic zone serve to magnetize more investment projects. As an indicator of these improvements, the Port of Salalah was ranked 6th last month on the global trans-shipment list, and 18th in overall global ports. This puts Oman on par with many of its neighbors including the United Arab Emirates.
As a result, it is unsurprising that this port is attracting extra attention, and altogether foreign direct investment into the Salalah hub was valued at $3.5 billion for 2012. Just last month, the major U.S. port Virginia International Terminals signed a Memorandum of Understanding to increase cooperation with its counterpart in Salalah. These sorts of developments also reflect the 2011 Trade Agreement between the U.S. and Oman, and the fact that Oman claims the speediest transit times from the Persian Gulf to the U.S.
What is more, many states in the local area are also seeking to energize regional shipping as an alternative to land or air transportation. For example, the Iraqi Ministry of Transport signed an agreement to open a direct maritime line with Oman in September, citing optimistic predictions for bilateral trade and tourism as reasons. Inevitably, the increased economic activity will serve to alleviate some of the obvious problems that Iraq is currently facing.
On another note, the more dense traffic at Oman’s ports may attract less-wanted attention from pirates, even including those from Somalia, who have taken on a more extensive turf in recent times. However, the greater significance of Oman to international trading partners, particularly the U.S., may also mean that efforts to counter piracy in the Gulf of Oman will be strengthened. Indeed, the EU Naval Force has recently increased its anti-piracy cooperation with Oman, which is described as “paramount” to improve the safety situation in the region.
All in all, Oman’s ports are looking very vibrant, and the Omani economy is likely to grow as a result and enjoy all the positive press that this is generating. Furthermore, this is definitely a positive development for states that want to secure energy from a place like Oman, which has successfully avoided religious extremism, while simultaneously promoting environmentally sustainable policies. With the added advantages of helping regional development and directing more attention to piracy issues, the growth of Oman’s ports should be a welcome sign for investors everywhere.
