Oman’s path to Iran

Oman’s path to Iran

Through economic ties and a careful, long-standing diplomatic posture, Oman has become a key player in the Middle East.

Over the last weekend of October, an International trade exhibition was held at the Khuzestan International Exhibition Center in the province of Khuzestan in Southwestern Iran (bordering Iraq and the Persian Gulf).

This conference was organized by Omanexpo and hosted jointly with the Khuzestan International Exhibitions Company. More than 6,000 people attended the conference and 65 companies were represented from several countries including the UAE, Jordan, Brazil, Bulgaria, Italy, and India. Oddly enough, it would have been hard to miss the presence of Oman at this event. In addition to being hosted by an Omani company, nearly half of the 65 companies represented were from Oman.

Oman’s pipeline deal with Iran strengthen trans-Strait of Hormuz ties

This conference is only one among many indicators of the recent strengthening of ties between Iran and Oman. The director of the National Iranian Gas Export Company’s (NIGEC), Alireza Kameli, announced last week (Oct. 28) that a deal had been concluded with Oman for Iranian Natural Gas to be converted at Oman’s Liquefied Natural Gas (LNG) production plants.

Those plants are currently operating at 25% below their total capacity, so this unused capacity will be dedicated to Iranian gas. Iran has also agreed to pay the commissioning costs for additional production plants to bring Oman’s LNG production capability up to 1.5 million tons/year.

In addition, this deal is tied to a second stage, involving the construction of a 200 km underwater natural gas pipeline from the Kish gas field (just off of Kish Island in the Persian Gulf) to Oman, discussions for which began in 2012.

It is expected that eventually the capacity of the pipeline will reach 3 billion cubic feet/day.

On November 2, only five days after the natural gas deal was concluded, it was announced that Sarooj, an Omani construction company would be bidding for the contract for a water pipeline project, which involves laying over 400 km of water pipes in southern Iran.

The water pipeline project is the second phase of a larger project with Golgohar Investment & Development Co., which is the parent company to several subsidiaries in the mining, extraction, and infrastructure development industries.

The director of Sarooj indicated that they had been in touch with Iranian counterparts and expected to be successful in their bid. Ahough the adoption of the Joint Comprehensive Plan of Action (JCPOA) by the P5+1 and the end of sanctions have allowed for this recent increase in economic activity, close economic and political ties have developed between Iran and the Sultanate of Oman over the past decade.

During the sanctions, the Omani exclave of Musandam, which is separated from the rest of Oman by the UAE and extends out into the Strait of Hormuz (only an hour from Iran by speedboat), served as a link to the wider economy, with nearly 200 companies in Musandam conducting business exclusively with Iran.

Muscat as Middle Man

At the level of governmental policy, Oman’s strategic maintenance of ties with all of its regional neighbors, along with close ties to the United Kingdom and the United States, has resulted in Oman quietly becoming a central player in the diplomatic relations of the Middle East.

Oman has played a particularly vital role with respect to Iran, and its influence has grown together with Iran’s over the past several months.

In 2011, Oman acted as an intermediary between Iran and the US to negotiate the release of several American hikers, and it was then able to offer to host secret meetings which led to the beginning of nuclear talks.

More recently, Oman has been mediating discussions over peace in Yemen, where Iran and Saudi Arabia are in the midst of a conflict by proxy. Oman’s foreign policy has also meant that it has maintained ties with Syria, so it is in the unique position of being able to leverage both its connections with the West and its contacts with Assad and Iran.

Oman’s foreign minister recently travelled to Damascus to meet Bashar al-Assad, before holding talks individually with both Saudi Arabia and Iran over the Syrian crisis.

In each of these areas that Oman has come to play a quiet, but central role, Iran has been one of the major players.

Thus, it is clear that Oman’s growing influence is tied to its close relationship with Iran, which it will likely continue to pursue both economically and diplomatically over the next decade at least. On Iran’s part, the relationship with Oman has allowed it greater participation in the regional politics and larger influence through a mediator than it might otherwise be allowed.

Given the concern of many in Tehran about the cultural harms of opening up too quickly to the West, it is likely that Oman will continue to be a desirable partner and intermediary.

As other countries look to invest in Iran, they would benefit from looking to Oman as an example of how to negotiate in the Iranian market and balance ties with both Iran and the United States (particularly as the US continues to enforce some of its own non-nuclear sanctions and restrictions).

About Author

Kevin Graham

Kevin Graham is a political risk analyst and historian of the Middle East with a background in Arabic and Persian translation. He holds a Bachelor’s degree in Philosophy and History, with a minor in Persian, from the University of California Berkeley, as well as an MA in Middle Eastern Studies from the University of Chicago and an MSt in Oriental Studies from the University of Oxford.