Reporting

Oman Has a Strategic Port to Avoid the Ormuz Straits

Duqm, once a modest fishing harbour located on the Arabian Sea is about to become an economic megalopolis—a mammoth project, initiated by the Sultanate of Oman but taken over by the great powers. On 13 March 2019 the United States signed an agreement to make it easier for their warships to access the harbour, but China may well turn out to be a major player in the Sultan’s conception, meant to revitalise and diversify Oman’s economy.

In the port of Duqm.
© Sebastian Castelier

The wind drives the waves against a barren, hilly shoreline, stretching as far as the eye can see. Duqm’s seaside horizon is still unspoilt nature for some hundred kilometres. For a long time, Sultan Qaboos was determined to protect Oman from projects harmful for the environment. But the governorate of Al-Wusta appears underdeveloped by comparison with its neighbours to the North and South, where the tourist trade and economic dynamism are years ahead. Duqm, a small coastal town, offers direct access to the Arabian Sea. Muscat has had its eye on the harbour’s potential for over a decade. Isolated from the rest of the country, the local population, estimated at 16,000 (of whom 4,000 are Omani nationals, according to the local authorities) has lived mainly by traditional fishing. For a long time, the port saw little activity and there were few prospects of employment. The authorities in Muscat, determined that the country should escape at least partially from its dependency on an oil and gas industry which accounts for 74% of the national income, have big plans for the future of Duqm. For seven years now, lorries and backhoe loaders have been busy laying out the first contours of an immense complex meant to occupy 2000 km2. The first construction phase should be finished by 2020, even if delays are to be expected.

Duqm port

A route to Africa and Europe

On the first floor of the huge headquarters of the SEZAD (Special Ecoomic Zone Authority), erected in the middle of nowhere, next to the new motorway linking Duqm and Muscat, Saleh Hamood al-Hasani surveys the constriction site in the distance. The general manager is proud to present “Oman’s biggest economic project, the biggest in the Middle East and one of the biggest in the world.” Plans include a multipurpose harbour, the largest dry dock in the region, an international airport, a refinery capable of handling 230,000 barrels of crude-oil daily and many luxury housing and tourist facilities. So far the Omani government has invested 1.7 billion dollars, but won’t go much further. Indeed, it will be limiting its participation to the basic infrastructures. Oman is counting chiefly on foreign investors. “Duqm occupies a strategic position. We are outside of the Ormuz Straits, on the international sea routes, very close to countries like India, Pakistan and Bangladesh. Duqm is also on the route to East Africa and is in contact with the other Arab Countries. All of which makes this city’s location quite unique.”

The new and empty highway linking Duqm to Muscat

Indeed, for any exporter, the Duqm project is quite attractive, offering as it does a point of anchorage between the Indian subcontinent and the East African coast. It also enables freighters to avoid the Ormuz Straits, a longer route to the Gulf countries which is increasingly unstable, as witness the recent escalation between the United States, United Arab Emirates, Saudi Arabia and Iran. The tension has ratcheted up of late with the sabotage of ships off the port of Fujaira and the attack on a Saudi pipeline, on 13 and 14 May respectively. “By doing business with Duqm, shippers can stop worrying about these instabilities,” Salah al Hasani argues.

Logically enough, China has made sure it will be an integral part of the project. As in the case of the new Silk City in Kuwait, the Beijing authorities’ interest in Duqm is part of their huge project to restore the Great Silk Road. The Omani port city fits perfectly into their Belt and Road Initiative. With this in mind, Asia’s leading power intends to provide 10.7 billion dollars and has reserved for itself 11.2 km2 in the economic centre of the new Duqm. The Oman-Wanfang joint venture, involving six Chinese companies, will take on the construction of an auto factory, a methanol plant, one for the production of building materials, another for solar energy collectors and, at the heart of its investment, an oil refinery. Thus China aims to one day process on the spot the oil which it imports from all the countries of the Gulf Cooperation Council. “Oman offers them stability. We are on good diplomatic terms with China and can offer them the role of economic operator,” Saleh al-Hasani points out.

A missing link in the New Silk Road

Foreign workers in the port

With its port at Gwadar (a former possession of Oman until 1959) in Pakistani Baluchistan, opposite the Omani coast, and its new port at Djibouti, China can connect these two distant crossing points. Thus Duqm will complete the linkage between the Asian continent, on the one hand, and the Arabian Peninsula and the Horn of East Africa on the other. Muhammad Zulfikzar Rakhmat, Middle-Eastern specialist of his region’s relations with China, reminds us that “historically, the Chinese used Yemen as a transshipment centre, but their presence in the Gulf of Aden dwindled on account of piracy. In future, thanks to the new harbour at Duqm, China will be able to avoid going that way and make its trade routes more secure.” Zakhmat foresees a continued Chinese presence on Oman’s “empty diagonal” for a long time to come. “There is no doubt whatsoever that China will unload its biggest ships in Duqm and send its smaller ones to other parts of the Middle East and East Africa.”

Hence, in the long run Duqm would compete with the ports of Khalifa (Abu Dhabi) and Jebel (Dubai), especially if the planned railway linking its harbour with the Gulf countries actually sees the light of day.

“The rail project would consist of linking all the Gulf Council countries together. But what with the economic slowdown due to the oil crisis, the project is on hold. This regional rail network would be an added advantage for Duqm, since freight could reach Kuwait in 48 hours, instead of three or four days by sea”, Saleham-Hasani adds. The political crisis in the Gulf, which began in June 2017, together with the indebtedness of the Gulf Council countries do not bode well for the realisation of this regional rail network. “No date has been set for this project” deplores Talal bin Sulaiman al-Rahbi, head of the technical committee of Oman Vision 2040 for Projects of National Development. Moreover, such a network would provide stiff competition with the Emirati port cities and favour the emergence of a rival pole in Oman. This would be a rather untenable situation, considering that both countries are in difficulty. Nonetheless, according to researcher Muhammad Rakhmat, Duqm would therefore be “an addition to Jebel Ali. China has no wish to replace existing ports but wants to build as many new ones as it can in the Gulf”.

Ship repair yard Oman Drydock Company

Li Lingbing, ambassadress of the People’s Republic of China to the Sultanate declared in April 2019 : “The Omani and Chinese sides announced last year the establishment of a strategic partnership and signed the ‘Belt and Road’ cooperation document. Oman officially joined the circle of friends of ‘Belt and Road’ .The Sultanate and China share a long historical heritage. Oman enjoys an important geographical location and excellent ports, such as Duqm, Salalah and Sohar that have a natural advantage in participating in building the ‘Belt and Road’ ”. Thus the three Omani ports would become stepping stones for Chinese trade with the East African market and through the Suez Canal to Europe.

In 2018, commerce between the two countries amounted to almost 22 billion dollars, up by 40% since 2017, an increase due in particular to the blockade of Qatar, obliged now to reroute its imports through Omani ports instead of Emirati ones.

Chinese boat in the port of Duqm

Local reservations

Although for the moment, few structures have actually been completed in Duqm, there are more and more building sites and local residents have already expressed misgivings and worries about the damages to their environment. Such is the case with several locally based fishermen who went to Muscat at the end of 2018 to complain to the Ministry of Agriculture and Fishing. The problem, according to a spokesperson for the Ministry, is that “some 400 large fishing vessels will exploit our vast marine resources, fish-processing plants and cold storage warehouses will be operating night and day to export our products, mostly to Asia.” Because indeed, the growth of Greater Duqm will involve the industrialisation of local fishing and the large-scale export of fish to the rest of the world. The 500 small-scale Omani fisherman take a dim view of such a development which may well deplete the schools of fish off the coast of the Al-Wusta governorate. “The Duqm fishing community dislikes those large vessels which will certainly overfish the existing stocks while we are too small to invest in this project,” Althebeeb Hamd, a veteran Omani fisherman tells us. “In the end, they’re going to take all the fish away” a worker in the fishing business complains.

In the suburbs of Duqm, the residential area built to relocate the 3,000 semi-nomadic fishermen and herders remains empty

In the same way as the local fishermen, the lives of many semi-nomadic Bedouin are impacted by the construction work. Some of their land has been requisitioned. In compensation, the Government has built a complex of 150 terraced villas a few kilometres south of the old city. 3,000 fishermen and Bedouin are meant to be housed there with their families in the middle of a desert area. But several months after completion, this residential neighbourhood remains totally unoccupied. In an effort to be reassuring, Saleh Hamood Al-Hasani claims that checking out which families are eligible for these costly gifts is a slow process. Actually, however, a number of fishermen and Bedouin are still refusing to leave their homes located on certain plots of land meant to be developed. “We want to get the local population to share in this new Duqm. It’s normal for people to be reluctant because right now they see no advantage in any of this. But soon local people will have first priority for certain investments, new jobs and better infrastructures. We’ve built motorways here, banks and shopping arcades, with bowling alleys and cinemas!” the SEZAD manager tells us proudly. According to the Omani government, the whole project, once it is completed, could create as many as 300,000 jobs and Duqm could add 5% to the country’s economic activity. Duqm’s wali tries to reassure us regarding the attitude of his population towards the ongoing upheaval of the environment: “it is normal for people to be afraid of anything new. But it doesn’t last once they get to know it,” he says with an embarrassed smile. According to him, the Omani have never voiced any complaints since he was appointed in October 2018, and his predecessor never mentioned anything of the sort. “Sooner or later, people who disapprove of the Duqm project will have to accept it because it will have had a positive effect on their lives!”