Oil & Pipelines in Oman

When the first cargo ship loaded with oil set sail from Oman in 1967 and headed out into the world, a new era began for the country on the Persian Gulf. Once a trading superpower that traded with China and maintained its own trading posts in Africa, Oman had become a simple and impoverished desert state where people lived off agriculture and livestock farming in the few arable areas. There were hardly any other sources of income, leaving the population poor and largely uneducated. The vast land was barely governable, leading to regular tribal conflicts and sometimes civil war-like conditions. However, with the revenues from the oil industry and the takeover of power by the equally far-sighted and prudent Sultan Qaboos Ibn Said much changed.

Expansion of the oil business

Oil and gas quickly became the main source of income for the Sultanate. Oman is one of the smaller oil suppliers in the world. It produces only about 1/10 of what is extracted in Saudi Arabia, for example. Nevertheless, the revenues flowed in and were utilized wisely.

First, Sultan Qaboos created a pipeline network spanning about 7,000 kilometers that connected Oman's oil fields to the long-time only major oil port of the country, Mina al-Fahal. Here, the oil was loaded onto ships and then sent to trading partner countries, preferably the USA, China, and Japan. Since 1982, there has also been a refinery in Mina al-Fahal, allowing the oil to be sold not only as crude oil but also in processed forms. Once the necessary network for oil trade was established and started running, the Sultan could also allocate funds for other important areas such as education and healthcare, fully aware that revenues from oil and gas trade would continue to flow.

Ports as an investment for the future

There have always been small port towns in Oman. Just the fishing villages along the coast gradually developed into port towns where, alongside ferries and smaller boats, cruise ships from various shipping lines increasingly docked.

None of these smaller ports reached the size of a true global trading port in recent decades, until Sultan Qaboos took on a new project in 2013: the port of Duqm. At first glance, this endeavor hardly seemed worthwhile. Duqm was not a natural seaport, so it required considerable efforts to build a seaport here capable of accommodating 70,000 residents in the city. However, due to the political situation, the expansion of the port became a wise strategy. The port of Mina al-Fahal is located directly on the Strait of Hormuz, which lies directly opposite Iran. It is not uncommon for freighters from the United Arab Emirates or Saudi Arabia to be impeded by the Iranian Navy on their way through the Strait of Hormuz. Should there ever be escalation between Iran, Israel, and the USA, a blockade of the sea route here is threatened.

Saudi Arabia and the UAE can bypass the dangerous strait with the new port in southern Oman and send their oil via pipelines through Oman to the port there, from where the oil can then be shipped all over the world. Thus, the construction of a second seaport became an investment for the future, in case the oil should ever run out. In this way, Oman can also profit from the oil trade of other nations, although only as a trading hub, but it creates jobs and stability in its foreign policy.