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Direct Line: At the Crossroads of Global Shipping: Logistics & Manufacturing Opportunities under the U.S.-Oman FTA

Bureau of Economic and Business Affairs
July 3, 2013


Topic: At the Crossroads of Global Shipping: Logistics & Manufacturing Opportunities under the U.S.-Oman FTA

Host: U.S. Ambassador Greta Holtz

Date, time, time zone for call: Wednesday, July 3, 2013; 11:30 a.m. EDT (1930 Local)

Deadline for RSVPs: Monday, July 1, 2013

Brief description of call: Oman's estimated $7 billion per year in infrastructure spending over the last decade has been focused on the three main ports of Sohar, Duqm, and Salalah; achieving its "Vision 2020" goals of economic diversification and job creation, and at the same time equipping the Sultanate to serve as a global shipping and logistics hub. Duqm is a brand new city established in the interior of Oman featuring a new port; roads; flood protection dams and breakwaters; naval base; drydock; a $120m fisheries hub; industrial free zone; hotels; power and desalination plants; a $6 billion, 230,000 barrels per day refinery; a $480m pipeline from interior oil fields; and oil tank storage farm. Sohar has been at the forefront of Oman's downstream manufacturing boom, featuring a free zone made up of aluminum, steel, plastics, petrochemicals, sulfur and fertilizer industries. Oman's largest oil refinery also resides there, and is in the process of a $1.5bn expansion to add an additional 60,000 bpd to its current 116, 400 bpd capacity. Salalah is attracting international attention for its prime location at the crossroads of East-West shipping and fast growth. When Oman's new $15 billion railway is complete (in a long term, 20 year project), connecting to the GCC network, shippers will be able to avoid the risky, costly Straits of Hormuz, simply dropping regional cargo at Salalah for onward multi-modal transit via rail, air, and local shipping. The PET and methanol industries in Salalah's free zone, in combination with Sohar, have contributed to Oman's success in reducing the contribution of oil and gas to only about 50% of GDP from the lion's share only about a decade ago (it still makes up 82% of state revenues), though the downstream manufacturing sector still relies on scarce gas for power as well as oil as an input. In order to address the shortage of gas to power industrial diversification, the GoO has awarded BP a 30 year, $15 billion+ concession to develop the Khazzan gas field, which will be able to produce an estimated 1 billion cubic feet per day when it comes online around 2016. The United States and Oman maintain close and growing economic and commercial ties. We have had a FTA since 2009, a reflection our belief that Oman’s strategic location, top notch infrastructure, and friendly environment make it a good place for U.S. companies to do business. Bilateral trade volume has grown by over 50% since the FTA was implemented, from $2.2 billion in 2008 to $3.1 billion in 2012. U.S. exports to Oman increased by 21%, from 1.4 billion in 2011 to 1.7 billion in 2012. Oman’s exports to the U.S. decreased by 69%, from a record high of 2.2 billion in 2011 to 1.3 billion in 2012.

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