From the Ground Up

Oman's efforts at diversifying through industrial investment have focused on downstream production from its petroleum industry in order to develop more value-added products for export.

Oman’s industrial sector is relatively small and underdeveloped, but efforts are underway to change that. The Sultanate’s economy is dominated by oil and natural gas, but government officials are working to increase the share of GDP that comes from industry; the government’s five-year development plan ending in 2020 identifies manufacturing as one of its five primary sectors, and a series of major projects linked with foreign investors should go a long way toward growing the industrial sector. If all goes well, it should provide Oman with a new source of economic activity, generating new jobs and a steadier source of revenue that will serve the Sultanate well in the future.

Oman’s vision for the industrial sector is for manufacturing to contribute 15% to GDP by 2020, a significant leap from the 10% it accounted for in 2014. To accomplish this, the government’s plans call for the industry to grow focusing on a few core products, namely plastics, chemicals, and concentrated industry in free trade zones. Plastics are a natural fit for Omani industry because its overlaps with the petroleum and natural gas industries. In 2016, the Oman Oil Refineries and Petroleum Industries Company (Orpic) broke ground on the Liwa Plastics Industries Complex (LPIC), Oman’s largest industrial project to date. The USD6.5-billion LPIC will process byproducts from Orpic’s Sohar Refinery to produce polymer products for both domestic and international use. Omani officials expect plastics production to increase by 1 million tons by 2019, doubling Orpic’s profits and giving Oman a steady new source of manufacturing revenue. The project should also prove a steady source of skilled labor—construction will employ over 7,000 workers and, once completed, the LPIC is expected to create more than 500 operation and technician jobs and generate more than 1,200 indirect jobs in the surrounding area.
Chemicals, too, are already a well-established part of the Omani manufacturing sector for similar reasons as plastics, and the government has plans to expand their impact. The Salalah Free Zone is a major chemical manufacturing area, and the government has aggressively pursued new investment to capture new downstream revenue from the Sultanate’s hydrocarbon production. A USD750-million ammonia production project was nearing final approval in July 2017; contracted with a Canadian firm, the plant is expected to have a final capacity of 1,000 metric tons per day once completed, allowing Oman to transition into the development of more complex synthetic resins and fibers. 2017 also saw the awarding of a contract for Oman’s first sebacic acid plant. The USD163-million project is a joint venture between Omani and Indian firms, making it the first international investment at the Duqm Special Economic Zone. Scheduled to be completed by the end of 2017, the plant will also produce sulphuric acid, glycerine, and octanol for domestic and international use.
Additional manufacturing plans aim to take advantage of Oman’s geographical location at the crossroads of shipping routes to Middle Eastern and Asian markets. The aforementioned free trade zones in Duqm and Salalah have well-established transport infrastructure thanks to Oman’s hydrocarbons exports, and government officials see significant potential in establishing new supply lines to major Asian and East African markets. Fisheries are just one example; there are plans to turn Duqm’s harbor into the largest fish processing facility in the Middle East, with more than 60 processing units in the special economic zone and facilities for storage and transport. Though still in the early stages, there are larger plans for an additional 10 new fishing ports to further develop the industry, with hopes that more than 10,000 new jobs can be created in the fisheries sector. Such plans are promising signs for the development of a diversified Omani industrial sector able to add value and generate revenues through a variety of export goods.

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