The transformation of Sohar

Since the establishment of the Sohar Industrial Port and the development of related infrastructure, Sohar has been witnessing a surge in industrial activity.
With a lot of industries situated on the 2000-hectare land of the Sohar Industrial Port, the port has gained importance in the regional and international markets. Because of the fully-functioning port and the land being made available for mega projects, the area is attracting huge investments.

Deputy CEO of the Sohar Industrial Port Corporation (SIPC) Jamal T Aziz remarked, "What started with the inception of SIPC three years ago as a project to capitalise on Sohar's geographical location and Oman's natural resources, mainly oil and gas, to generate added value to Oman's economy, has now resulted in the establishment of a world-class industrial port of great promise."
Sohar's development coincides with the high demand for oil. With its abundance of oil and gas resources besides its strategic position in the shipping lanes, Sohar is an attractive proposition for investors.

SIPC has been praised for its initiative to develop Sohar port and turn the area into a thriving maritime and industrial hub. In the short span of three years, the port has received investments of more than US $11 billion into projects ranging from port facilities to factories and utilities.
Minister of Communications and Chairman of (SIPC) Mohammed Al Harthy commented that the industrial projects at Sohar are among the most ambitious in the Middle East. He believes the projects will maximise productivity and promote marketing.

He feels that success of the Sohar Industrial Port was assured because of the strong degree of trust and commitment from SIPC partners, the Omani government and the Port of Rotterdam. The ongoing development of the port also provides a continuous avenue of employment for Omani youth.
The discovery and commercial exploitation of natural gas has given a much-needed boost to Oman's manufacturing sector, which is showing signs of diversification. The total estimated investment in gas-based industry sector projects currently under construction/development is US $9 billion. These projects are scheduled on go during the 2006-2008 period. The rewards from some of the projects already on stream will be seen in later period of this year. As the industry grows, it will contribute significantly to the nation's GDP. Exports will likely multiple and direct and indirect employment opportunities will increase.
Once a quiet corner, Sohar has been transformed into a new and vigorous engine of industry.

Major projects

Fertilizer Project

Sohar International Urea & Chemical Industries SAOC is a fertilizer company promoted by Shaikh Suhail bin Salim Bahwan. The project will have capacity of 2000 tons ammonia per day and 3500 tons granular urea per day. The project cost is US $ 650 million. The project is expected to be in commercial production by the last quarter of 2007. Engineering, procurement and construction (EPC) contract was recently awarded to Japanese consortium led by Mitsubishi Heavy Industries Ltd. The process technology will be provided by Haldor Topsoe for ammonia, Snamprogetti for urea synthesis and Yara Fertilizer Technology for urea granulation. Credit facilities will be provided by the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXT).

Methanol

The Sohar Methanol Project was executed in 2004. An agreement was signed by the government with Oman Methanol Company.
This is the first Gas Supply Agreement executed by the government for supply of natural gas to a private sector gas-based industrial project in Sohar through the 32-inch Fahud to Sohar gas pipeline built by Oman Gas Company.
Under the agreement, Oman Methanol Company will receive natural gas for a period of 25 years. The first methanol production is expected by December 2006. The project, with a total investment of about US $500 million will have a production capacity of 3000 tons per day. Meanwhile, plans are already afoot for a second methanol plant at the same site to double methanol production by end of 2007.

Sohar Oil Refinery

Sohar Oil Refinery project is expected to commence commercial operation by the third quarter of 2006. Total cost of the project is US $ 1.3 billion. The government and Oman Oil Company promote the project jointly with 80 per cent and 20 per cent equity participation, respectively. The refinery will produce propylene, LPG, gasoline, aviation fuel, gas oil products, etc. The project includes a crude unit with a capacity of 116,400 barrels per day and fuel oil distillation unit with a capacity of 75,360 barrels per day. The refinery will have the potential of 600 jobs as direct employment.

Polypropylene Oman Polypropylene LLC, a company promoted by Oman Oil Company (60 per cent0, LG International (20 per cent) and Gulf Investment Corporation (20 per cent), is setting up a 340,000 tons per annum capacity polypropylene production facility. Sohar Refinery Company will supply propylene feedstock. Estimated cost of the project is US $320 million. A consortium of LG International and LG Engineering and Construction Corporation will construct the plant. The project construction started in the second quarter of 2004 and the commercial production is expected by the last quarter of 2006.

Aluminum Project

The aluminum project is aimed at producing electrolytic aluminium from imported alumina by utilizing the power generated from natural gas. The project will have both power plant and the aluminum smelter. The project smelting capacity will be of 325,000 tons per annum in phase I period of development and the capacity will be further increased by another 325,000 tons at a later stage. Proposed captive power plant capacity will be 800 MW. An additional power generation capacity of 600 MW will be created during phase II stage.
Sohar Aluminium is a joint venture by Oman Oil Company (40 per cent), Abu Dhabi Water and Electricity Authority (40 per cent) and Alcan Inc. (20 per cent). The estimated phase I project cost is US $2 billion. The project will be based on most advanced and highly efficient Pechiney-AP30 technology developed by Alcan Inc., Canada. EPCM contract has been awarded to Bechtel. Commercial production is expected by the end of 2007
Bechtel has signed an agreement with Sohar Aluminum to build an aluminum smelter in northern Oman. The smelter is a part of an overall US $2.2 billion project that will include a power station, a desalination plant and a port facility. Bechtel will provide EPC and project management for the smelter, which will have a capacity of 325,000 tones of aluminum per annum.

Petrochemical

The Government of Oman, Oman Oil Company and Dow Chemicals jointly formed a company Oman Petrochemical Industries LLC to set up a project to produce 1.1 million tons of polyethylene per annum. The total estimated project investment is US $2.50 billion. The petrochemical complex will comprise feedstock production facilities, gas cracker and world scale polyethylene production unit.

Ethylene Dichloride (EDC)

The Sultanate of Oman has signed a US $300 million deal for this project. A shareholders' agreement was signed in the first week of November 2004 with LG International (LGI) of South Korea and Iran's National Petrochemical Company (NPC) for setting up a US $300 million Ethylene Dichloride (EDC) plant. The plant will produce 300,000 tons of EDC and 240,000 tons of caustic soda a year.
Oman Oil Company (OOC) will have a 33.4 per cent stake in the new venture, while LGI and NPC will each own 33.3 per cent of the shares. Equity capital will fund 30 per cent of the project cost, and the balance 70 per cent will be financed through loans from local and international banks. The plant is expected to begin commercial production in the second quarter of 2008.

Steel Project

Shadeed Iron and Steel LLC, a company formed by Al Ghaith Holding, a UAE based business group will be setting up an integrated steel plant at Sohar in technical collaboration with Midrex Technologies, USA and VAI Fuchs of Germany. The first phase of the project will produce 720,000 tons of hot bricketted (HDRI/HBI) iron, including 500,000 tons of steel billets, per annum. In the second phase, the capacity will touch one million metric tons per annum. The project cost for the first phase is estimated at RO 350 million. Production will commence in the first quarter of 2007. The major markets will be Oman, the UAE, India and China. The ore will come Australia, Brazil, Russia and Sweden, the world's leading producers.
The steel project will expand its production capacity to four million metric tons per annum at the end of the third phase (2009-2010). After completion of all three phases, the total number of direct manpower required will be 585. It is also expected to provide indirect job opportunities for more than 700 people

Aromatic Complex

Oman Oil Company, jointly with Oman Refinery Company, is setting up US $956 million aromatic complex. The basic engineering contract has been awarded to Axens, Paris. The aromatic complex (petrochemicals) will produce 800,000 tons per annum of para-xylene and 210,000 tons per annum of benzene, which are used as raw materials to produce polystyrene, nylon, detergents and other chemicals.