SOHAR Port & Freezone organised a day-and-a-half tour of their mammoth, state-of-the-art facility on November 21 and 22, 2021. OERLive’s Digital Editor, Swathi Suresh, reports on the operations of the port and free zone, their contributions to the Oman Economy, and their journey towards becoming a sustainable ‘Green Hub’ 

CONTRIBUTION TO NATIONAL ECONOMY: 

This year has been very successful for SOHAR, despite the challenging economic environment, with increases in cargo reported every quarter in comparison to the same periods in the previous year.

In Q1, the Port’s handling of goods in and out of the Sultanate (throughput) increased by 21 per cent over the same period in 2020, dry bulk volume grew by 23.6 per cent to almost 9 million tons, breakbulk handling grew by 6.8 per cent to 426,783 and liquid bulk increased by 7 per cent to just over 4 million tons.

In addition, the number of containers handled rose by 1.9 per cent to 1.9 million and the total vessels visiting the port rose by 13.7 per cent to 843 vessels. The port also witnessed a spectacular growth rate of 200 per cent in Ship-to-Ship (STS) cargo operations. The only slight backward step was for roll-on/roll-off (ro-ro) cargo, with the 23,000 wheeled units handled in this period representing a 22 per cent drop.

The Port recorded further growth in Q2 as throughput increased by 14 per cent over the same period in 2020 and Ship-to-Ship (STS) cargo increased by an impressive 168 per cent. Meanwhile, the number of handled containers totalled 190,000 TEU, in addition to 804 vessel calls, up by 18 per cent from Q2 2020.

The land occupancy at the Freezone also showed a rise of 10 per cent compared to Q2 2020.

Given the prevailing global circumstances outside of our influence, the growth in activity within the Port and Freezone is very much a positive indicator of the progress SOHAR continues to make in terms of attracting investment and positioning Oman as a major global logistics hub.

It cannot be overstated how difficult the pandemic has been for everybody. The effects have been felt in every area of our operation, but by working closely with the Ministry of Health and implementing the latest guidelines throughout the complex the port was able to remain active 24 hours a day, seven days a week. SOHAR Port and Freezone took the risk posed by COVID-19 incredibly seriously since the very start and implemented a wide-reaching range of precautions to protect employees, tenants, and the local community.

To maintain safety on-site, schedules were rearranged and alternate teams of employees set up to manage incident response. To prevent interaction between teams and avoid infection, each team worked at a different location, alternating between in the office and telecommuting, while making masks and gloves mandatory on the site.

Each team consists of a minimum of two Duty Managers, two Duty Coordinators, one Senior Port Control Officer and one Marine Safety Officer. A second office was set up for critical functions, primarily Port Control, as an alternative to working from home.  By introducing these measures alongside stringent Health, Safety, Security and Environment (HSSE) policies, SOHAR has been able to remain in full operation since the pandemic began and even increase the levels of cargo traffic during this period.

SOHAR plays an important role within the community and has also been vital in supporting the country to achieve the goals set by Oman’s Vision 2040. Alongside these priorities, SOHAR has established its own goals to optimize performance at the Port and Freezone by emphasizing innovation, technology and energy efficiency. We are consciously reducing the carbon footprint of the complex by opting for cleaner fuels such as hydrogen powered vehicles and LNG.

We have also prioritized efficiency by developing greater synergy between the different companies within the complex and sharing utilities and products between industries. This innovative practice is in its early stages, but has proved successful so far.

There are companies that produce CO2 and companies that need CO2 to boost production, and previously there had been a disconnect between the two. Our objective is to make sure CO2 leaves our industries as a product and not as a harmful greenhouse gas. By exploring the opportunities between the needs of one and byproducts of another we have been able to use energy in a smarter way and free up gas and other feedstock supplies by helping tenants to be more efficient in their processing by linking them together, which in turn helps businesses and SMEs to grow.

The Port is focused on providing top-class maritime services to its clients, partnering with local SMEs to develop a full-service ecosystem to further build SOHAR into a service hub. Contributing around 2.8 per cent of Oman’s GDP, increasing In-Country Value (ICV) remains a high priority within the Port and Freezone operations.

Recently, the Port welcomed the MV Lem Marigold bulk carrier at lay by berth 25, where the cleaning operation was carried out by International Marine Survey Services Co. LLC., an Omani-based marine company. Credential Ship Services LLC have also been signed to be the second service provider for crew change and supplies at sea. SOHAR joined also hands with Hormuz Marine in September 2021 to introduce bunkering services 24 hours a day, seven days a week from an 8000 MT tanker.

In addition, SOHAR’s Commercial Department and Marine Team signed an agreement with two new partners to handle Ship Chandling licensing operations. Local business, Seven Seas Ship Chandlers LLC will provide general ship supplies, spare parts and marine waste collection, and Diyafah Supplies & Services Co. LLC will support new bunkering operations with hoses and marine fenders. In efforts to make fuel cleaner, SOHAR has plans to develop a first of its kind bunkering terminal with LNG.

As the largest employer in the Al Batinah North Governorate, SOHAR is committed to developing the skillsets and employability of Omanis. It maintains the highest levels of Omanisation to ensure the complex continues to benefit the local community. Further expanding its impact, SOHAR tenants are also required to maintain Omanisation levels in excess of the criteria stipulated by the government.

A MOVE TOWARDS GREEN HYDROGEN:

The potential for SOHAR to host a large-scale green hydrogen generation hub powered by solar power plants is also being explored. The planned facility will create carbon-free hydrogen from low-cost solar power, stored for use on demand.

In a white paper released by CEO Mark Gielenkirchen, he outlined how green hydrogen has the potential to decarbonize a range of heavy industries long associated with carbon emissions. The potential to produce green steel with renewable hydrogen could be a revolution in innovation and an option for Oman to invigorate manufacturing by creating a multi-billion-dollar export industry. SOHAR is working in collaboration with the Port of Rotterdam, as well as Hydrogen Rise, and other research institutes worldwide, to identify cost-competitive solutions for the adoption of hydrogen as an alternative to natural gas.

In August 2021, The Port of Sohar joined a national Hydrogen alliance led by The Ministry of Energy and Minerals (MEM) – known as Hy-Fly – to place Oman firmly on the map for the development and deployment of clean hydrogen. Hy-Fly is made up of 13 key public and private organizations – the Authority for Public Services Regulation, Petroleum Development Oman, Energy Development Oman, OQ, Oman LNG, BP Oman, Oman Shell and Total Energies Oman, Sultan Qaboos University, GUTech and the ports of Sohar and Duqm – and facilitated by PDO’s Energy Renewal unit.

Hydrogen is believed to have a significant potential to cut greenhouse gases in the sectors responsible for global emissions. The alliance will work together to support and facilitate the production, transport and utilisation of clean hydrogen for domestic use and export, as well as promoting clean hydrogen through investments, technologies, policies, and expertise across the whole hydrogen supply chain. This alliance is a milestone in Oman’s drive to diversify its energy mix while addressing the mounting climate change realities by supporting national energy security, decarbonization, and ultimately a successful transition to the green economy.

SOHAR has also engaged with leading Italian energy companies including ENI, SAIPEM, SNAM, Magaldi and Ansaldo Energia to explore cooperation between the two countries in the development of green hydrogen and renewable energies. Italy is at the forefront of renewables and also co-chair of the COP26 United Nations Conference on Climate Change. An agreement with Italian companies will offer Oman access to cutting-edge technology in the field of alternative energy sources already in development in Europe.

The Port of Rotterdam is actively exploring the creation of a complete hydrogen value chain with carbon-free and low-carbon hydrogen. This was the main topic of conversation at the 2nd World Hydrogen Summit, held online in July 2021, organized by the London-based Sustainable Energy Council in partnership with the Port and the City of Rotterdam.

The Port is currently in the process of agreeing on MOUs and joint partnerships with potential exporters, including SOHAR. By using the Port’s solar PV development on-site for further development of hydrogen production, Oman is widely seen to have the potential to become a net exporter of green hydrogen fuel and SOHAR is ideally placed to become a leader in this industry.

As the demands of a growing economy increase, SOHAR continues to experience a rapidly-rising demand for energy, much like all ports around the world. This was anticipated and SOHAR has joined forces with Shell to co-develop onsite solar power projects to harness solar power within a dedicated 600-hectares solar PV project area and create long-lasting economic value for the Sultanate and the companies in the Freezone.

EXPANSION AND FUTURE PROSPECT:

SOHAR Port represented Oman’s shipping and logistics sector at Hypermotion Dubai, a unique platform that connects founders, disruptors and true innovators to discuss cutting-edge technology in a panel discussion related to the use of drone technology within the industry held during Expo 2020 Dubai.

Port of Sohar’s Senior Engineer of Asset Management, Eng. Sufyan Al-Mamari joined industry leaders and innovators to outline the success of tech at the Port and Freezone.

Capitalizing on drone technologies, SOHAR became the first in the Sultanate of Oman to use drones as part of the Port’s monitoring system, allowing real-time observation and analysis of the infrastructure, security and environmental situation across the port. The port also utilizes underwater drones to inspect and perform maintenance tasks.

Equipped with a camera, the small unmanned vehicles are able to send images to the quay where problems can be solved quickly and up-to-the-minute status reports can be compiled. This data-driven approach has helped SOHAR maximize efficiency and predict future maintenance through lifecycle reports which also allows port engineers to plan upgrades and guard against potential service interruptions.

Understanding the importance of partnerships and knowledge sharing, the Port and Freezone welcomed several overseas delegations this year in a bid to expand ties and explore new collaboration opportunities.

A high-profile Saudi business delegation visited Sohar Industrial City in August 2021 to explore the investment climate in the industrial city. HE Dr Saleh bin Said Al Masan, Undersecretary for Commerce and Industry in the Ministry of Commerce, Industry and Investment Promotion, and chairman of Madayn’s Board of Directors, welcomed the Saudi business delegates and briefed them on Madayn’s mission to attract industrial investments and providing continued support, through regionally and globally competitive strategies, good infrastructure, value-adding services, and easy governmental processes.

This was followed by an official visit by the Mayor of Rotterdam, Mr. Ahmed Aboutaleb  to SOHAR Port and Freezone. The visit provided an overview and comprehensive tour of the complex as well as an update on the latest additions and plans for the future.

ACHIEVEMENTS AND SUCCESS: 

Situated at the center of global trade routes between Asia and Europe, and halfway between Dubai and Muscat, SOHAR Port & Freezone is one of the largest industrial and logistic projects in the Sultanate. It is also one of the fastest-growing sports in the world.

A joint venture with the Port of Rotterdam, SOHAR Port & Freezone faces the Arabian Sea with direct access to the Indian Ocean and allows the world’s largest ships to dock without having to navigate the Strait of Hormuz, the only waterway between the Persian Gulf and open ocean where one-third of the world’s liquefied natural gas and 25 per cent of total global oil consumption passes through.

SOHAR Freezone offers a wealth of benefits to overseas investors, including 100 per cent foreign ownership, attractive local labour requirements, 0 per cent import/export duties and 0 per cent income tax, as well as a dedicated One-Stop-Shop service to acquire all registration, licenses and visas. The Port operates a Customs Clearing Service available 24 hours a day, seven days a week, and a bonded transport corridor between Port and Freezone which allows goods to reach their destination in under 14 minutes.

SOHAR Port & Freezone expanded its reach this year by signing a Memorandum of Understanding with the Brazilian Port of Pecém. The partnership intends to share SOHAR’s expertise in attracting Foreign Direct Investment so that the Port of Pecém can continue to grow and benefit the local economy of Fortaleza. In return, SOHAR will gain access to Brazilian companies looking to expand, offering them opportunities to be hosted within the Freezone.

The tenth-largest port in the country and the closest to both the USA and Europe, the Port of Pecém is considered to have the best port and hinterland infrastructure connectivity in the region and is one of the few Brazilian terminals capable of handling ultra-large container vessels.

SOHAR’s own partnership with the Port of Rotterdam, and now the Port of Pecém creates triangular trade routes for the shipment of large quantities of Iron Ore, cement and LNG from Pecém to the Netherlands and Oman. SOHAR can ship back steel, petrochemicals and plastics, while Rotterdam – the largest port in Europe – handles over 400 million tons of goods each year. The potential for expanding trade between Asia, Africa, Europe and South America is enormous.

The first project together will be exploring ways to increase containerized throughput in sectors such as fresh food. The Port of Pecém exports large amounts of fruit and grain and this can help SOHAR expand the volume of cargo to meet the demands of the local and regional market. The agreement also highlights renewable energy, such as Green Hydrogen.

In line with the Sultanate’s objectives and aspirations within Oman Vision 2040 to increase revenue from the logistics sector, SOHAR Port and Freezone also signed a Development Agreement with Hutchison Ports Sohar to commission a joint Feasibility Study which will assesses the social, environmental, logistical, In-Country Value and economic impacts of any future expansion.

The study is currently under review and provides the outline for a clear roadmap for future expansion to meet the needs of the growing local and regional economy. Apart from enhancing the competitiveness of SOHAR Port, at regional and global levels, especially in containers and cargo handling, it will further contribute to the generation of more local employment opportunities and create more space for new industries to be based within SOHAR.

MESSAGE FROM THE CEO:

Mark Geilenkirchen, CEO of SOHAR Port:

2020 was a year that showed our true metal because despite the challenging market conditions from COVID-19 and fluctuating oil prices, we ended the year with strong overall performance, increasing throughput volume over 2019. Our outlook for 2021 is promising as we enter the final quarter. The SOHAR Port and Freezone has attracted new business and investors throughout the year, all the while, successfully negotiating the COVID-19 crisis by introducing effective measures to keep employees, tenants and the community safe.

From a national perspective, our impact is exponential. Seven out of 10 products that people buy or consume come via our port. Together with our tenants, we are committed  to the government and the people of Oman is unwavering as we maintain our sustainable and resilient supply chains.

Looking to the future, we have strategically set our course to capitalize on our location, resources and competitive edge as well as invest in new technologies to cement Oman’s leadership position in the global logistics arena. Once the road to Saudi Arabia opens and as we continue to unlock our downstream revenue streams, we are confident that further growth and development is in our future.

Omar Mahmood Al Mahrizi, CEO, SOHAR Freezone and Deputy CEO of SOHAR Port:

SOHAR Port and Freezone is playing a vital role in connecting Oman to markets around the world, thus contributing to a stable supply of commodities for the local market while providing local businesses with greater global outreach. The SOHAR Port is the main gateway for import and export in the Sultanate, handling over 70 per cent of the Sultanate’s imports and over 40 per cent of exported and 80 per cent of re-exported goods.

SOHAR has been designed to maximize efficiency and provide access to an abundance of energy, raw materials and world-class logistics that help businesses succeed as well as provide opportunities for SMEs and Omani companies to flourish.

The thriving economy, diversity of industry and potential to transit through Oman to Eastern and Western markets has already made Sohar an important commodity for international companies and our expansion plans are set to increase the opportunities even further and enhance our reputation and that of Oman as a trade and manufacturing hub.  Against this promising backdrop and as economies gradually reawaken and fully resume operations, we expect our overall throughout for 2021 to be the strongest yet.

At the CEOs Round Table at SOHAR Port & Freezone Exclusive Tour