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OMANOman blends tradition with

MODERNITY

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Astrategically advantageous locationat the mouth of the Arabian Gulf hasmade Oman a stalwart of maritimetrade for centuries. Its close rela-

tionship with the sea and its extensive knowl-edge of seamanship are symbolised by fleetsof dhows, the country’s distinctive ancientships. So it is little wonder that a nation of suchrenowned seafaring tradition is currently inthe process of transforming its Port of Duqminto one of the largest maritime hubs in theMiddle East as part of a vision to redefine itseconomic future. The multibillion-dollar Duqm project –

along with new airports, economic zonesand other infrastructure developments –form part of a concerted national push topivot the sultanate’s economic base awayfrom its current heavy reliance on revenuesgenerated by its relatively modest oil andgas reserves, the astute management ofwhich has served it well over the past fourdecades. Hydrocarbon revenues and on-going economic and social reforms have ledto Oman being commended as the nationthat has made the greatest improvementsin its quality of life indices worldwide overthe past 40 years, according to a 2010 re-port by the United Nations Development Pro-gramme (UNDP). After coming to power in 1970, His Majesty

Sultan Qaboos bin Said opened up the coun-try and embarked on various economic re-forms and boosted social spending. “HisMajesty had a vision to use the revenuesfrom oil to benefit the lives of the people, par-ticularly with regard to education,” commentsNasser bin Khamis Al Jashmi, Undersecretaryat the Ministry of Finance and Chairman ofOman Oil Company. As such, Oman’s oil rev-enues have been consistently invested back

into the nation and its infrastructure, partic-ularly roads, schools, hospitals and utilities. Although not immune to the influence of

political dissent in the region, Oman has sofar not experienced the violence that hasdestabilised some of its neighbours. Duringthe Arab Spring, disturbances and proteststook place mainly in Sohar and the capitalMuscat, but were distinctly low-key and spo-radic compared to elsewhere in the Arabworld. His Majesty announced a combina-tion of wage and cost-of-living reforms andincreases in welfare spending, which – alongwith continued calm at home and violenceblighting other countries in the region – ledto a continuation of the nation’s politicaland social compact. Consequently, public investment in-

creased and the 2013 social spending bud-get of 12.9 billion rials (£21 billion) was thelargest ever – by 29 per cent – and target-ed education, social security and healthcare.Increased salaries and at least 20,000 newgovernment jobs were promised last year.

The sultanate, however, is also encourag-ing the private sector to participate in rais-ing socioeconomic standards for Omanisby striking public-private partnerships (PPPs)and enhancing the environment for smalland medium-sized enterprises (SMEs). Bothareas have been recognised as vital toOman’s future, with both also ripe for involve-ment by British firms interested in max-imising the close relationship a historic al-ly in the region can offer. A centuries-old heritage of trade across

land and sea is reflected in the Omani ability

to negotiate and maintain solid relationsoverseas. Oman and the UK have enjoyedclose relations, both politically and com-mercially, for more than 350 years, sign-ing friendship treaties in 1798, 1800, 1891and 1951. Today, relations between the two nations

have never been stronger. The UK is thebiggest foreign investor in Oman and polit-ical leaders on both sides are calling for theprivate sector to further tighten bilateraltrade links. “With Oman the beauty of therelationship is the network of relations ofevery type and every level across society,”says the British Ambassador to Oman, JamieBowden. “You’ve got on a personal level avery warm relationship between His MajestySultan Qaboos bin Said and Her Majesty theQueen. You also have very tight commer-cial relations between businesses and busi-ness people; you’ve got a large number ofOmanis who studied in the UK and manymore who lived in the UK for other reasonsand have built a network of personal friend-ships with people in the UK.”Oman’s diplomatic nous and importance

as a regional ally is demonstrated by its main-tenance of diplomatic relations with Iran.His Majesty lobbied the Iranians on behalfof the United States to release a detained

OMAN

PROJECT TEAM: Editorial Director William Palmer, Project Coordinator Tara McIntyre and Regional Director Gemma Gutierrez SPECIAL THANKS:World Report would like to thank His Highness Sayyid Faisal bin Turki Al Said, Mohammed Al Busaidi, Jamie Bowden, Majdi Fawzi and Ian Gladwin for their assistance in the production of this report

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Facts & figures

Diversity andpartnershipsto sustainfuture growthAfter four decades of increasing prosperity and quality of life, Oman is tackling new and distinct challenges tomaintain the momentum of its development

His Majesty Sultan Qaboos bin Said with Queen Elizabeth II and Prince Phillip during a state visit to Muscat (Ph

2 World Report

#Oman

uCapital:MuscatuArea: 119,500 square miles;slightly larger than the UK

and Ireland combineduPopulation: 3,154,134 (2013 est.) uLabour force: 968,800; about 60 percent of which is non-national (2007 est.)uPublic debt: 4.1% of GDP (2012 est.) uGDP (purchasing power parity): $91.54billion (2012 est.)uGDP (per capita): $29,600 (2012 est.)uGDP (real growth rate): 5% (2012 est.)

uCurrency: Omani rial (OMR); pegged tothe US$ at $1 = 0.3845 rialsuInflation rate: 2.9% (2012 est.)uIndustries: crude oil production andrefining, natural gas and LNG production;construction, cement, copper, steel,chemicals, optic fibre uExports: petroleum, reexports, fish,metals, textiles uImports: food, livestock, lubricants,machinery, equipment, complete goods

Source: CIA World Factbook

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OMAN

World Report 3

DiscoveringDuqmNext to one of the most ambitiousdevelopments in Oman – anemerging global-scale maritimegateway that ranks among thebiggest logistics projectsthroughout the Middle Eastregion – is an area of protectednatural beauty that juxtaposesDuqm’s organically evolved pastwith its master-planned future. The 46-million-year-old Rock

Garden is considered one of themost important heritage sites inOman. It comprises three squarekilometres of sandstone andlimestone sculptures that havebeen shaped by wind, water, frostand other natural forces, whichare typical of the numerous andunusual rock formations in Duqmand its surrounding areas thatcould potentially become majortourism attractions.Leading environmental expert

Peter Farrington joined the SpecialEconomic Zone Authority in Duqm(SEZAD) last year to investigatehow best to protect, conserve andpromote the vast geologicalwealth in the area and is leadingthe creation of an arts and culturecentre near the Rock Garden. Hecame highly experienced in thearea as while working at the Portof Duqm he also founded the“Duqm: Portraits of Discovery”project that brought together 140photographical and visual worksof art that displayed individualartistic perceptions of the region’slandscape and seascape. The project showcased pieces

by 35 Omani and internationalartists who took part in the 2011exhibition, including theNetherlands and Oman-basedBrazilian artist Vera Mauro, one ofwhose photos of the Rock Gardenappears on page 9 of this report.

This report has been made possiblein part by a special partnershipbetween World Report and Times ofOman, which has also enabled thereport to be distributed throughoutthe sultanate. Times of Oman isOman’s first and leading Englishdaily newspaper. Established in 1975and published by Muscat Press andPublishing House, it covers newsevents, culture and lifestyle, finance,politics and sports from the region,Asia and the world.

Times of Omanwas the firstnewspaper in the country to createan online edition, as far back as1998, and today it also boasts amobile application, a highly activesocial media presence and anincreasingly sophisticated website:www.timesofoman.com.A pioneer in the media sector, the

newspaper has won close to 150international awards from variousentities in the realm of design andpresentation over the past fewyears, including nine from the AsianMedia Awards, nearly 100 from theSociety for News Design’s (SND)Creative Competition, three fromCommunication Arts Design Annualand two from World Press Cartoon,among many others. scat (Photo: UK Press via Getty Images)

Ahmed Essa Al Zadjali, CEO ofMuscat Press and Publishing House

American journalist, and eventually par-don three young hikers who were accusedof spying in 2009. According to the UKTI, strengths of the

Omani market include: an open economy;no personal income tax; full repatriation ofcapital, net profit and royalties; English iswidely spoken; and good air connectivityto all major cities. It also highlights the so-lidity of its financial system – and limitedexposure to the recent global crisis – as amajor plus point.“The medium-term outlook on Oman

remains highly positive,” says HamoodSangour Al Zadjali, Executive President at

the Central Bank of Oman (CBO). “Oman’ssavings and investment as share of GDPhas increased significantly in recent years.The country has a fairly well developedphysical infrastructure that continues to wit-ness rapid expansion and improvement.Oman’s banking system is sound and ef-ficient, mainly due to appropriate regula-tory and supervisory framework adoptedby the CBO. Oman has emerged as an at-tractive destination for foreign investmentdue to its stability, amenable investmentclimate and a unique geographical loca-tion, in addition to various incentives of-fered by the government.” ●


ENTERPRISE

Interest soars in Islamic financeOman’s new Islamic banking sector isexpanding rapidly and is set to take on amajor role in the nation’s progress

The Royal decree issued by His Majesty Sul-tan Qaboos bin Said in May 2011 heralded thelaunch of the country’s Islamic banking sec-tor and the creation of its first two dedicatedIslamic financial services institutions: BankNizwa and Al Izz International Bank. Basedon the ethical principles of Islamic law (alsoknown Shariah), Islamic finance involves thesharing of profit and loss and the prohibitionof the collection and payment of interest. Established conventional lenders in the

sultanate have also since opened Islamic win-dows to offer Shariah-compliant productsand the sector registered a more than 30per cent growth rate in its first two years. In 2012 both new banks floated initial pub-

lic offerings (IPOs), following the require-ment by the Central Bank of Oman (CBO)that they list at least 40 per cent of theirshares. Both IPOs were heavily oversub-scribed, indicating whetted appetites in theregion for Islamic products on the Muscat

Securities Market (MSM) – which in Septem-ber launched its new index for Shariah-compliant companies.“The CBO is confident that the advent of

Islamic banking will have a positive impacton the economy. Oman offers a large po-tential for the growth of Islamic banking,opening up new segments and players bothfrom banks within and investors from abroadand thus providing opportunities for newforeign investments,” says CBO’s ExecutivePresident Hamood Sangour Al Zadjali. “Itsinclusion will add to the competitive environ-ment, providing the consumers the benefitof choosing between both conventional andIslamic banking products.”Dr Jamil El Jaroudi, CEO of Bank Nizwa,

says the new products pique the interestof many people who want to marry theireconomic lives with their ethical beliefs andadds: “Although we only started with threebranches, sometimes we receive more than1,000 visitors per day asking not just toopen accounts, but also to learn more aboutthe industry. So it shows that there is still alot of awareness work to be done.” ●

Up until the 1970s, Oman’s econo-my was largely based on agricul-ture. The advent of oil extractionand production caused a para-

digm shift in the country’s finances, raisingGDP growth to unprecedented levels andpivoting the economy towards the hydro-carbons sector.Today, however, another paradigm shift

is necessary if Oman is to ensure sustain-able economic growth.Production has been steadied in the last

few years but Oman’s oil reserves are grad-ually shrinking. The government has laidout a plan to reduce the hydrocarbon sec-tor’s contribution to GDP from its current lev-

el of about 47 per cent to just 9 per cent by2020 and in doing so, it aims to generatemore jobs in a wider variety of sectors forthe rising numbers of young Omanis enter-ing the labour force. The latter has the dualpurpose of increasing the level of “Omani-sation” and lowering the dependence on ex-pat workers.SMEs are being centred as one of the key

drivers of diversification. Under the recom-mendation of the Central Bank of Oman,many of the country’s banks are makingSMEs’ access to financing more achievablethan ever before. The National Bank of Oman(NBO) and Ahli Bank, for example, have ac-tive programmes in place for lending to SMEs.

According to the CEO of NBO, SalaamSaid Al Shaksy, the bank is also “looking atmaking equity investments in medium-sizedcompanies with excellent prospects.”“A lot more can be unleashed from the

SME sector in terms of value creation,” headds. Despite having created a support-ive environment for their growth, the gov-ernment cannot single-handedly boostSME productivity and success. Therefore,the private sector is also doing its part bylending its expertise to up-and-comingentrepreneurs.The Zubair Corporation is one such com-

pany. Managing Director Khalid M. Al Zubairsays: “As a country, we have to build suffi-

cient incubators, venture capital venues androbust mentoring programmes and I see thatlarge and established corporations can playa valuable role in this sphere.”One of Oman’s original private sector

pioneers that developed business linesessential to the country’s growth, TheZubair Corporation has established theZubair Small Enterprises Centre where ateam of professionals liaise with and offer advisory services to SMEs and busi-ness entrepreneurs and hold manage-ment training sessions.“Not every company [in the holding] can

afford the best level of HR, communica-tions, IT, etc., but as a group we can share

The sultanate is transforming itself into a more competitiveplace to do business to steer its economy into new waters

Dr Jamil El Jaroudi (centre), CEO of Bank Nizwa, the country’s first Islamic bank, welcomedlast year’s Lord Mayor of London Roger Gifford (left) and the British Ambassador JamieBowden (right) on a visit to the bank’s head office in Shatti Al Qurum in January 2013

4 World Report

Economicdiversificationstimulates newcommercialecosystem


ENTERPRISE

World Report 5

highlights that his country’s markets are“sound and fair”, which is more importantthan being large and fast-growing. “We lookfor the long run,” he says. “To give an exam-ple, in 2002 we became the first country tointroduce corporate governance in the re-gion. We are trying to build solid bases forour future development.” Incentives are also available in this area.

According to the Director General of Mus-cat Securities Market (MSM), Ahmed SalehAl Marhoon, the MSM was perhaps “the

only exchange allowing foreign investorswithout restriction in the region, with no taxon capital gains and no restriction on cashmovements. We don’t have any sort of hin-drance on foreign investments.” Oman’s sound stock exchange is com-

plemented by a solid financial sector, a se-cure macroeconomic environment, a freemarket system and political stability – fac-tors that the Central Bank’s Al Zadjali saysare responsible for Oman’s emergence asan attractive destination. ●

the expertise between companies and addvalue within our own core. This formula wecan replicate with SMEs,” adds Mr Al Zubair.The Zubair Corporation has demonstrat-

ed the need for flexibility and diversifica-tion. What began as a trading company in1967 is now a holding with activities in en-ergy and logistics, engineering and con-struction, ICT, real estate and hospitality, fi-nancial services and manufacturing. “Astime elapsed, we became more and morein tune with what the country needs in ser-vices and products and hence moved intoareas based on Oman’s key needs and pri-orities,” explains the CEO. This was how The Zubair Corporation

ended up opening the Shangri-La’s BarrAl Jissah Resort & Spa in 2005. Tourismwas a virtually untapped sector at thetime and is now proving to be a key piecein the government’s economic diversifi-cation scheme. One of the biggest employers in the coun-

try, The Zubair Corporation was founded byKhalid Al Zubair’s father, Mohammad AlZubair, and today remains a family run en-terprise. The managing director feels thatthis quality lends the corporation strongroots in the community. “Long-term stability and continuity

means that responsible outlook is embed-ded in our business model,” he says. “A com-mitment to the community can also raisemorale within the company and meet theneeds of employees, especially those inthe younger generation who wish to workfor successful companies that have broad-er goals than simply the pursuit of busi-ness success.”As for the government’s “Omanisation”

and job creation plan, training is, of course,a key component, yet Omani schools arein some ways still behind schedule in teach-ing the necessary skills for today’smarket. Thus, some companies aretaking matters into their own handsand providing in-house training.

Areej Vegetable Oil & Derivatives (AVOD),for example, is one regionally importantplayer that has opened its own internal train-ing centre.“We are already 60 per cent ‘Omanised’,

which is about double the industry aver-age,” says Prem Maker, Executive Director.“If we are to progress further we need toreplace the other 40 per cent who holdvery technical jobs and because trainingfor these trades is not available in the openmarket, we have to provide the training –both in the classroom and on the job.”AVOD is a vertically integrated compa-

ny that processes raw untreated oils itsources from around the world, manufac-tures all packaging components and, ulti-mately, distributes its own products. The National Bank of Oman, has also

opened its own academy to train people.“Our CSR strategy is supporting the youthand developing their capabilities,” says MrShaksy. “We have developed our own peo-ple; Omani people are on our director’sboard. We’ve sent people over to businessschools in other countries to prepare themto confront challenges.”As economic diversification can be ex-

pedited through greater foreign participa-tion and investment, the Omani Govern-ment is keen to welcome global investors,as Hamood Sangour Al Zadjali, ExecutivePresident of the Central Bank of Omanpoints out. “Oman provides a number ofincentives in the free trade zones amongwhich are 100 per cent foreign ownership,no custom duties on import and export ofgoods, no taxes levied on profits or divi-dends on businesses operating in thesezones,” he says.“The Public Authority for Investment

Promotion & Export Development (PAIPED)as well as the One Stop Shop (OSS) at theMinistry of Commerce and Industry areboth dedicated to facilitating and attract-ing investments.”Oman’s capital markets are yet another

way business can grow, providing, as theydo, means to raise funds for newprojects and growth. Sheikh Abdul-lah Salem Al Salmi, Executive Presi-dent of the Capital Markets Authority

Oman’s industrialestates and freezones offer investorsattractive incentivesand can serve as anideal base to accesslarger markets

Tourism and theservices industry arethe main economicareas thegovernment wouldlike to expand in itseconomicdiversification plan

Prem Maker, Executive Director of Areej Vegetable Oils & Derivatives

Khalid M. Al Zubair, Managing Director ofThe Zubair Corporation


EDUCATION

Healthcare t Entrepreneurial spirit getseducational boost with ICT As the public healthcare

system struggles tosustain its world-classlevels of service to agrowing population, theprivate sector is beingasked to lend a hand

As His Majesty Sultan Qaboos binSaid began his reign in 1970,Omani healthcare facilities werebarely existent. In response, he

made the development of a world-classhealthcare system one of his top priorities.Investment of oil wealth made this possi-ble and more than 40 years on, Oman canboast one of the best healthcare systemsin the world.In the World Health Report 2000, which

included an evaluation of the world’s healthsystems, Oman came in eighth positionin the overall global ranking. The UN Hu-man Development Report has put the sul-tanate at the top of 135 countries that havemade the greatest progress in recentdecades in public health. The remarkable progress made since

the beginning of the Omani Renaissanceis reflected in vital health statistics: life ex-pectancy at birth has risen from around57 years in 1980 to 72.4 years in 2011; theinfant mortality rate has been reducedfrom 116 (per 1,000 births) in 1970 to 9.5in 2011. “The improvements in some measures

of the healthcare system have been quitephenomenal over the last 20 to 35 years,”said Nigel Weale, former Director of Mus-cat Private Hospital (MPH), in an inter-view last year.Economic growth on the back of oil

wealth has made this progress possible, butgrowth itself brings with it other challenges.A growing and longer-living populationcoupled with the proliferation of lifestyle-related diseases – such as obesity, heart dis-ease and diabetes – mean the public health-care system and public investment cannotsustain a high level of service alone. A huge level of private investment will

also be required, as well as a greater num-ber of private healthcare services. Whilethe demand for private healthcare increas-es as the population becomes more afflu-ent, the value of the healthcare industryis set to rise from $1.3 billion in 2012 to $2billion in 2015.“The government is actively looking to

encourage and work with the private sec-tor, not just to fill the gaps, but to providethe capacity that’s being required. As thepopulation develops, there is an increas-ing demand that both the private and thegovernment sector are going to have tokeep up with,” said Mr Weale.Expenditure by the Ministry of Health

is expected to rise from $3.53 billion inits seventh five-year plan (2006-10) to$6.47 billion during its eighth five-yearplan (2011-15), as large-scale projects such

Oman is working towards aknowledge and innovation-based society to diversify theeconomy. Entrepreneurship

and higher education have received in-creased attention in the Gulf state andmuch emphasis has been placed on thedevelopment of small and medium-sizedenterprises (SMEs). Institutions such asthe Sultan Qaboos University (SQU) andthe Information Technology Authority(ITA) are working to hone the skills ofyoung Omanis and encouraging themto establish their own start-ups, particu-larly in the fields of science, innovationand high technology.“We have a vision for this university

to become an entrepreneurial univer-sity. We are concentrating on researchat the moment, but we want to turn itinto an entrepreneurial university. Weare trying to introduce entrepreneurshipas much as possible, and that is ourgreatest challenge,” says Dr Ali bin SaudAl Bimani, Vice-Chancellor of SQU –Oman’s only public university and witharound 17,000 students.The ITA was set up to lead the devel-

opment of the all-pervading ICT sectorin Oman, especially in the areas of e-government, industrial developmentand capacity building within society.ICT is seen as one sector in whichthere are many opportunities forstart-up companies. The authority provided training

for students and an incubationprogramme (which is being co-

managed by Coventry-based firm UK-BI) to encourage innovative thinkingwithin the sphere of high technology. It also wants to change the mindset

of young people who often think it is amuch safer and better option to entera government or large private compa-ny, rather than to take the risk of launch-ing their own enterprise.“Oman is really progressing in the

ICT sector. We see the potential for cre-ating small companies and ICTs as a verypromising track,” says the CEO of ITA,Dr Salim Al Ruzaiqi. “We would likeyoung people to do something veryinnovative so we have several initia-tives for them. “For example, one is called The Nest,

where we just try to catch all the inno-vators, people with ideas. They comeand sit and have bright ideas and wehelp them to move their ideas forwardand support them financially. We havean incubation facility that can host about60 companies.”Of course all of this potential in the

ICT sector cannot be realised withoutthe proper infrastructure in place; thecountry’s telecom operators will be in-strumental in this regard. The goals ofthe ITA are being supported by com-panies like Nawras, the country’s first

privately owned telecom opera-tor and second largest behindgovernment-owned Omantel.“We are trying to ensure that

Oman has the best, most mod-ern telecommunications business-

enabling and lifestyle-enabling technol-ogy in the world,” says Ross Cormack,former CEO of Nawras.The British businessman – who re-

cently left his post at Nawras to becomeCEO of the Myanmar unit of Ooredoo,Nawras’ parent company – says: “I reada study that said for every 10 per centincrease in broadband penetration inthe country, it typically generates be-tween 1.4 to 1.6 per cent extra GDPgrowth. If that is anything like the truthhere, we have gone from 30 per centpenetration in the mobile market to 170per cent today.“It is people’s ability to do business

faster, better and make decisions morequickly and efficiently that makes theeconomy grow faster. We also play ourpart in education in the sense that ed-ucation is management of knowledgeand helping students have the right in-formation in the right place.“Oman has a huge opportunity

ahead of it; whether it is knowledge intelecommunication, science or med-icine, all of these will flourish in thenext few years.” ●

Public bodies universities and telecoms play a role in enabling diversification through ICT infrastructure developmentand knowledge transfer

Dr Ali bin Saud Al-Bimani, Vice-Chancellor of Sultan Qaboos University

6 World Report


HEALTH

World Report 7

e to see multibillion-dollar investment

as the Sultan Qaboos University Hospi-tal and International Medical Cities – cost-ing a total of $3 billion – come on streamin the next two to three years.“Healthcare is a sector we are very inter-

ested in. There is a very ambitious pro-gramme developing the healthcare sectorhere which involves building, training andevery aspect,” says the British Ambassadorto Oman, Jamie Bowden.Muscat Private Hospital, a state-of-the-art

facility in the Muscat neighbourhood of

Bausher, was the first large private hospi-tal in Oman when it opened in 2000 andbecame the first hospital in the sultanateto receive accreditation from Joint Com-mission International (JCI). The hospital management is expecting

much more competition in the comingyears as more and more private healthcareinstitutions are established to feed thegrowing market.“This is going to be quite a competi-

tive market over the next few years and

we need to accept that, react to that, butin a positive way,” said Mr Weale. “It willkeep all of us on our toes. We are confi-dent that we will stay ahead of the op-position competition.“We have invested heavily in technolo-

gy, so we have tended to look at makingsure that we are ahead of the rest of theprivate market,” he commented, addingthat there are also plans to increase bedcapacity from 72 to 200 over the nextthree to five years.

The management at MPH is also ac-tively committed to assisting the publichealthcare system and meets regularlywith the Ministry of Health. It has offeredto share its radiology, diagnostics and op-eration services in a bid to cut long wait-ing lists at public hospitals. ●

MuscatPrivateHospital wasthe country’sfirst largeprivatehospital whenit opened in2000 and thefirst toachieveaccreditationfrom JointCommissionInternational(JCI)


PETROLEUM

Pioneering methodsfrom ‘comeback kid’

Oman’s deposits of 4.9 billion bar-rels of crude oil and 849.5 cubicmetres of natural gas place thesultanate 25th and 27th globally in

terms of proven reserves. A mature oil pro-ducer, with explorations dating back to the1950s, and the largest in the Middle East whois not a member of OPEC, its available de-posits may be on the decline and dwarfedby those in neighbouring Saudi Arabia, Unit-ed Arab Emirates and Qatar, but they arenevertheless significant. In 2012, hydrocar-bons accounted for 86 per cent of govern-ment revenues and around half of total GDP.Furthermore, increasing challenges to theirextraction have spurred innovative newmethods in the industry and added impe-tus to raising Omani skill sets and the pushfor economic diversification.Unlike its neighbours with giant, fluid

lakes of oil under their soils, Oman’s oil re-serves are more likely to be held in scat-tered, smaller fields, which age quicklyand leave thick, sticky crude that until re-cently needed expensive technology to ex-tract. Such characteristics led to oil pro-duction falling by more than 26 per cent

between 2000 and 2007, from 972,000barrels per day (bpd) to 714,800 bpd. How-ever, Oman has since been referred to asthe “comeback kid of the oil world” as itswillingness to innovate and test frontiertechnologies has returned the industryto former production levels. “Oman is a small producer when you

take global production into account, withabout 950,000 barrels a day. We couldreach a million, but the most importantthing is to reach a level of production whichis sustainable,” says Nasser bin Khamis AlJashmi, Undersecretary at the Ministry ofFinance and Chairman of Oman Oil Com-pany (OOC). “We are trying to reduce costsby applying the latest technologies andstreamlining operations.” Mr Al Jashmi highlights the industry’s ap-

plication of unconventional extraction tech-niques such as hydraulic fracturing – orfracking – and injecting liquid polymers intoheavy-oil fields to force the crude out as a ma-jor part of its upswing. “We have found inmany cases costs are going down as welearn how to drill more efficiently; in some cas-es costs have fallen by 50 per cent,” he adds.

Enhanced oil recovery (EOR) techniquesare vital to the industry’s future. PetroleumDevelopment Oman (PDO) – a 60 per centgovernment-owned joint venture that pro-duces 70 per cent of the country’s oil outputand accounts for almost all of Oman’s natur-al gas supply – is a major proponent of theirdevelopment. PDO expects 16 per cent of itsoil production to come from EOR projects by2016, up from just 3 per cent in 2012. It is al-so investing heavily in training Omanis inEOR and helping the country to be a futureexporter of expertise in the sector. “The experience in having to deal with

complex and unconventional reservoirs hasallowed Oman to uniquely develop special-ist niche expertise in this field that has the po-tential to be exported,” says Mulham Al Jarf,Deputy CEO of OOC, the country’s flagshipenergy investment firm, which established ahuman capital development unit – Takatuf –in 2010. “Today, what we see in Oman thatstill remain untapped are complex and of-ten unconventional and deep reservoirs. Inorder for OOC to grow its Omani productionbase and reserves, it will need to tackle suchreservoirs.”

“We have no geographic restrictions,” addsMr Al Jarf. “As a rule of thumb, we seek over-seas investments that can be linked back toOman, bringing with them value and knowl-edge transfer into the country.” OOC is also an active contributor to Oman’s

In Country Value (ICV) initiative, which “playsa key role in unlocking economic potential inOman as well as helping to create a sustain-able economic base,” says Mr Al Jarf. “The suc-cessful long-term development of SMEs hasproven time and time again in many countriesto be the engine that drives the economy.” The company heavily invests in energy

and energy-related sectors, which are broad-ly categorised as: exploration and production(E&P), refining and marketing, base petro-chemicals, specialty chemicals, infrastructure,power, shipping, and metals and mining. ItsE&P arm, OOCEP, has a 40 per cent stake ina new fracking project at the Khazzan field withBP, which received the green light from thegovernment in December. Construction onthe $16 billion development starts this year andit is expected to produce at least 1 billion cu-bic feet of gas per day, starting in late 2017,raising the country’s current output by aroundone-third. In addition, OOC and BP have signeda memorandum of understanding to devel-op the world’s first acetic acid manufacturingplant using BP’s new SaaBre™ process. “As we invest for the future, perhaps the

most important part of our investment is in-vesting in the people who go with the plansand operations for many decades,” saysDavid Dalton, Regional President Middle Eastat BP. “There will be a need to continually lookfor the more difficult hydrocarbons. But withthe right investment climate and incentivesfor foreign investment, and the right encour-agement and framework set by the ministry,I am optimistic that will happen.” ●

Oil and gas reserves that require ever-greater technical skills to extract mean Oman’spetroleum industry is pioneering new methods that have revitalised the nation’s oil sector,while economic diversification will reduce its reliance on petroleum revenues

Oil production fell from 972,000 barrels per day (bpd) to 714,800 bpd between 2000 and 2007, rebounding to be now around 950,000 bpd

“We seek overseasinvestments that can belinked back to Oman,bringing with them valueand knowledge transferinto the country”

MULHAM AL JARF,Deputy CEO of Oman Oil Company (OOC)

8 World Report


TOURISM

World Report 9

Development of Oman’s tourismindustry became a key govern-ment policy plank in 2004 with theestablishment of the Ministry of

Tourism (MoT). Since then there has beenheavy investment in the sector through var-ious public and private sector entities. As the country looks to create a sustain-

able economy, tourism holds huge poten-tial considering its offerings: rich heritage, nat-ural attractions, stunning beaches, adven-ture activities such as cliff diving and scuba-diving, souks, forts, the Musandam peninsu-la, khareef (monsoon) season in Salalah, five-star desert camps, sand dunes, pink sun-sets, spectacular mountain ranges, genuine-ly friendly Arab culture, and world-class ho-tels such as The Chedi Muscat Hotel andShangri-La's Barr Al Jissah Resort and Spa.In fact the sultanate was in-cluded on the list of the ‘20Top Tourist Destinations inthe World’ in National Geo-graphic in 2012.“Seventy per cent of our

tourist attractions are natur-al attractions: natural beautyand the heritage that we have.Each region has its own iden-tity and uniqueness, andtourism products fit the na-ture of the region,” saysMaitha Al Mahrouqi, Under-secretary at the MoT. “We know the tourismindustry can create sustainable jobs, espe-cially through SMEs.”Oman has one of the fastest growing

tourism sectors in the world. A 2009 WorldTravel and Tourism report states that theindustry will grow by 7.8 per cent per year,reaching a value of almost $7 billion by2019. The GDP contribution of tourism was2 per cent in 2011; the MoT aims for that

figure to be around 3.5 percent by 2015. Visitor numbers have in-

creased steadily, reaching 1.6million in 2010. Tourists fromthe UK have risen sharplyfrom 25,000 in 2003 to121,000 in 2012 – a 15 per centincrease on 2011. As part ofthe Vision 2020 plan, theMoT hopes that the sultanatewill have 12 million visitors by2020. To reach this ambitiousfigure, much more invest-

ment and promotion will be required. Central to these plans is Oman Air. “The

expansion of our national carrier, OmanAir, has definitely helped us to promote thecountry,” says Ms Al Mahrouqi. The airline’s expansion reflects the steady

growth of the tourist sector itself: passengernumbers rose to 4.5 million in 2012 and lastyear the carrier served around 5 million trav-ellers. Since 2006, Oman Air’s fleet has grown

from nine to 30 aircraft and is poised to ac-quire an additional 16 by the end of 2015. Itnow has an extensive international networkincluding six European cities. Furthermore, in 2012 Oman Air won Best

Business Class Airline Seat at the presti-gious World Airline Awards, run by Skytrax,for the second year in a row.“Oman Air has come a long way. It has en-

abled Oman to encourage tourism,” saidWayne Pearce, former CEO, in an interviewlast year. “The airline looks upon itself as be-ing an integrated part of Omani tourist in-frastructure. It is keen to work with [the MoT]and has taken part in many joint promo-tions with them.”Another integrated part of the Omani tourist

infrastructure is The Wave, a world-class lux-ury mixed-use residential project spread alongsix kilometres of Muscat’s coastline, compris-ing homes, retail units, restaurants, hotels anda PGA-standard 18-hole golf course designedby Greg Norman. It is also home to Oman’slargest private yachting hub.

“The Wave is a strategic part of Vision2020 and the diversification of the econo-my from oil; and is a vehicle for providingenhanced tourist infrastructure,” said formerCEO Michael Lenardruzzi. “It brings invest-ment by allowing foreigners to purchase re-al estate here. Bringing in people from dif-ferent countries and different backgroundsadds to the vibrancy of projects like this. Theresidential element of the project providesa community and also a cash flow to fundthe development of tourism infrastructure.”Ms Al Mahrouqi is also Chairperson of

Oman Sail, which, like Oman Air, is chargedwith promoting Oman. CEO David Grahamsays the company was established in 2008“to reinstate the maritime heritage of thecountry” and apart from running sailingschools, Oman Sail is “pushing the Omanbrand around the world.” Now having teams compete on the world

stage, it is raising the profile of Oman in-ternationally, as a unique high-end touristdestination. ●

While developing its tourisminfrastructure, Oman is keen to maintain its distinctcultural identity

Each region has its ownidentity and individuality,with potential tourismdevelopment lying in theirrich heritage, souks, forts,five-star desert camps,world-class hotels andadventure activities

Natural attractionsinclude stunning beaches,the Musandam peninsula,khareef (monsoon)season, spectacularmountain ranges, sanddunes and genuinelyfriendly Arab culture

Duqm’s protected Rock Garden forms part of Oman’s cultural tourism offer (Photo: Vera Mauro)

Maitha Al Mahrouqi,Undersecretary at the MoT

A land of unique experiences


INFRASTRUCTURE

10 World Report

$20bn investment to repositionOman as gateway to the Gulf

Oman is seeing further renais-sance in its transport infrastruc-ture, where everything fromseaports and airports to rail-

ways and roads are the target of heavy in-vestment. In bygone days, the countryplayed a much bigger role in regional tradethan it currently does. With a host of infra-structure projects at varying degrees ofcompletion, the government aims to takeadvantage of Oman’s unique position onthe eastern edge of the Arabian peninsula:outside the Arabian Gulf and opening outon to the Indian Ocean and its trade routesto Asia and East Africa. “Oman, due to its strategic location and well

geographically seated place in front of thepeninsula, has always historically been thegate of the Gulf,” says Minister of Transport

and Communications, Dr Ahmed bin Mo-hammed bin Salim Al Futaisi. “However, now due to the requirements for

big infrastructure, Oman has really in the lastfew decades not played the role of gatewayand all the traffic, especially the ships, hastransferred to the other GCC [Gulf Coopera-tion Council] countries.” The government is tackling all fronts simul-

taneously, building six new airports, its first-everrailway network, further developing its ports andlaying thousands of miles of new roads – all ofwhich will help integrate Oman with the rest ofthe Arabian Peninsula. The budget for these mas-sive projects tops the £20 billion mark.

The fast track to the GCCThe GCC Rail Project plans for 1,395 miles oftracks traversing the Arabian Peninsula andconnecting the GCC economies for the ben-efit of regional trade. It will link major cities andtowns such as Muscat and Sohar to each oth-er and to Oman’s borders, where it will con-tinue into the UAE and on to Bahrain, Qatar,Saudi Arabia and Kuwait. The first line is dueto begin operation in 2018.

Dr Al Futaisi foresees that the new railnetwork will be a guaranteed boon to car-go transport, yet getting people to switchfrom cars to trains will take a bit more work.“For the passengers, we really need to workharder to gear the mentality and the mindsof people to different modes of transport oth-er than cars,” he says.

Oman’s ports of callOf the six ports, the key contributors to theeconomy are those in Sohar, Salalah andDuqm. The former, located 143 miles north-west of the capital, will become the new maincargo port, serving the densely populated AlBatinah region and Muscat Governorate, andfreeing up the capital’s Sultan Qaboos Port fortourism purposes. According to Andre Toet, CEO of Sohar In-

dustrial Port Company, the Sultan Qaboos Portsimply has no more room to grow. “It hasreached capacity. So the decision was madeto close it for commercial cargo and to trans-fer the cargo to Sohar,” he says. The Port of Salalah, in the far southwest

and already ranked among the world’s top 30

ports, will be the main transhipment hub. “Ourproximity to rapid growth markets is quiteunique,” said the port’s former CEO, Peter Ford.“That demand has shown that there is a needfor continual investment. We have expandedtwice in our history already; we have had over600 per cent growth on both the containerand general cargo sites since we started in 1998.”Duqm, situated about halfway down the

eastern coast, is to be Oman’s biggest in-dustrial area. Dr Al Futaisi calls it “a flagshipfor Oman” and it comes complete with a spe-cial economic zone, a dry dock and a newairport (see page 12 for more on Duqm).Active in all areas of shipping, including

LNG, crude oil, refined petrochemicals and drycommodities, Oman Shipping Company (OSC)is one local firm that is helping raise the levelof local participation. CEO Tarik Mohamed AlJunaidi says OSC is also “looking at adding val-ue to the value chain” by providing a greaterarray of services that would contribute direct-ly to the economy through additional rev-enues, job creation and support services. OSC – a closed joint stock company owned

by the Ministry of Finance and Oman Oil

The sultanate’s transportand logistics infrastructureprovides solutions toincreasing demand

Dr Ahmed bin Mohammed bin Salim Al Futaisi, Minister of Transport and CommunicationsNew airports, ports, railways and thousands of miles of roads will reshape Oman’s connectivity


INFRASTRUCTURE

World Report 11

Company – owns and manages more than40 vessels and charters many to third par-ties. Its own container line, the Gulf Express,makes regular trips between Jebel Ali in theUAE, Sohar and Muscat.

Off to a flying startWith improved transport comes improved busi-ness opportunities and, by extension, highertourism traffic. “A lot of the air freight that enters Oman

comes via Dubai and is trucked across the bor-der because we do not have sufficient capaci-ty,” points out Vic Allen, acting CEO of OmanAirports Management Company (OAMC). “So once we have built a new airport, that will

all change. We will be able to attract much greatervolumes of cargo and air freight through Mus-cat, which will help a lot in terms of freshness ofproduce, range and depth of product, etc.” A new terminal is being built at Muscat’s air-

port, with a capacity for 12 million passengersa year. In 2012, the Muscat International Airportserved more than 7.5 million passengers, upmore than 1 million from the previous year.Transport Minister Dr Al Futaisi remarks thatpassenger traffic has grown on average by 18per cent every year and that by 2020 figuresmight even reach 14-15 million. On the other hand, Salim Al Aufi, CEO of the

Public Authority for Civil Aviation, sees thingsthe other way round. Not wanting to put thecart before the horse, he says: “The first thingwe need to do is really start marketing Omanas a destination for business or tourism. Withthat, you get the heavy traffic; and with theheavy traffic we can start to take the next steptoward expanding the existing airport to thenext phase and so on.”OAMC’s Mr Allen points out that tourism in-

frastructure is being developed to prepare fora niche, high-end market. “It is visitors who will appreciate what this

country has to offer, which is a mix betweenmodernity and tradition. It is the friendly peo-ple,” he says, adding that Oman Air is also ex-panding its offer of point-to-point non-stopflights in order to make Oman a more attrac-tively convenient destination. The investment opportunities that these pro-

jects are opening up are ones that Oman is keento draw attention to and foreign expertise is un-ambiguously welcomed. The Transport Minis-ter says there is an “open invitation to all the in-vestors, to all companies to come and share withus in such big developments.” ●Six new airports under construction will greatly expand business and tourism route options for passengers and the national flag carrier Oman Air

Of the country’s six ports, the key economic contributors are those in Sohar to the north, Salalah in the south and the southeastern Port of Duqm


PORT OF DUQM

12 World Report

Out of a quiet fishing village about350 miles south of Muscat, atremendous, record-breakingproject is taking shape. Once

finished, Duqm will be the new home ofa deep-sea port, a fishery harbour, a re-finery, a petrochemical plant, an interna-tional airport, a tourist resort and an en-larged city, complete with all the neces-sary and desired social infrastructure for100,000 residents. Entrusted with converting this greenfield

site into a wonder for investors, workersand visitors alike is the Duqm Special Eco-nomic Zone Authority (SEZAD). “We arecapitalising on the strategic location ofDuqm and the potential of the zone to an-chor investments in the industrial, logis-tics and tourism sectors,” says Yahya AlJabri, Chairman of SEZAD.Khalil Ahmed Al Salmi, Deputy CEO of

Oman Drydock Company (ODC), enthusesabout the fact that the entire area is beingbuilt from scratch. “This is a greenfield site;whatever you can imagine can be done.It is available for any opportunity.”

The first enterprise to be up and run-ning was ODC – an impressive ship re-pair yard, which in its first two years ofoperation already worked on 120 ships.Indeed, ODC is one of the largest andmost modern of its kind in the Middle East,and Mr Al Salmi forecasts that soon ODCwill be able to handle upwards of 200ships each year. The world’s largest vessels can drop

anchor in Duqm, thanks to its deepdraughts (water depth at commercialberths is 18 metres). As a matter of fact,all of Oman’s ports share this quality,something that Peter Broers, former CEOand appointed General Manager of In-dustrial Land at Port of Duqm Companyin September 2013, names as one of themain factors behind the country’s success. The government sought out experts in

port management to help boost its infra-structure and operations. “For the Port of Sohar, the government

selected the Port of Rotterdam and forthe Port of Salalah, Oman cooperates withthe container technology company APMT,

which is connected to Maersk. For Duqm,the Omani Government invited the Portof Antwerp to manage the port and since2011 the Port of Duqm Company has ex-isted,” explains Mr Broers. He adds that each port has its own

unique strength: “Duqm will be the bestoption for the heavy and petrochemicalindustry and its related cargo.”Expertise from the Belgian port will be

evident throughout the port’s operations,

yet perhaps none as apparent as the com-puterised system. “Today it is importantto bring in IT systems for paperless op-erations. This idea is quite new in the re-gion, although it has been developed inEuropean ports and used for decades,”says Mr Broers. Although the port infrastructure is still

under development, commercial opera-tions are already under way.Located in the Wusta Governorate, the

Port of Duqm – which is expected to gen-erate some 15,000 direct jobs – will pro-vide a logical gateway for the hinterland’shydrocarbons and mineral resources, suchas limestone, silicate sand, dolomite andbasalt, among others. Smart investorswould tap into these minerals to developnew industries, like cement and glass, toadd further value. New roads and railways will ensure that

Duqm is well connected, not only to therest of Oman, but also to the ArabianPeninsula. The airport, due to be finishedby 2015, will have capacity for half a mil-lion passengers per year. ●

Duqm is the home of a multi-purpose port, a dry dock and a special economic zone, all designed to boost economic developmentby connecting Oman with some of the world’s most crucial trade routes and enhancing access to the Arabian peninsula

New port to open trade options

The world’s largestvessels can dropanchor in Oman’sports, thanks to theirdeep draughts, andinternational portmanagement expertsare advising on thelatest IT and smoothoperation solutions


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