Oil & Pipelines in Oman

Oil & Pipelines in Oman

Philip Eichkorn
Written by: Philip Eichkorn Last updated at: September 21, 2022

Oil & Pipelines in Oman

When the first oil-laden cargo ship left Oman in 1967 and left for the world, a new era began for this country on the Persian Gulf. Once a true world power in a trade that traded with China and maintained its own trading posts in Africa, Oman had become a simple and impoverished desert state, where people lived in a few areas focused on agriculture and livestock. There were no other sources of income, so the population was poor and largely uneducated. The vast country was difficult to govern, which led to regular tribal feuds and quasi-civil war-like conditions. But with the revenue from the oil business and the seizure of power of the very judicious Sultan Qaboos Ibn Said, much changed.

Pipelines & ports in Oman – the backbone of wealth

Oil and gas quickly became the sultanate’s primary source of income. Nonetheless, Oman is one of the smaller oil suppliers in the world, producing only about 1/10 of the oil that Saudi Arabia extracts from its oil fields, for example. But the business is thriving anyway and the revenue has been used wisely. First, Sultan Qaboos created a network of approximately 7000 kilometers of pipelines that connected Oman’s oil fields with the port of Mina al-Fahal which was Oman’s single major oil port for a long time. At this harbor, the oil was loaded on ships and transported to international trading partners like the US, China, and Japan. Since 1982, there is also a refinery in Mina al-Fahal, so that the oil can be sold not only crude but also refined. Once the necessary infrastructure for the oil trade was established and started to produce, the sultan could also spend revenue on other important issues in the country such as education and health, knowing that the revenues from oil and gas trading would continue to come.

A second port – limited efficacy for the present, but an investment in the future

Small port cities always existed in Oman – the fishing villages along the coast gradually developed into port cities. Here, ferries and smaller boats docked and more and more frequently, the larger cruise ships of various shipping companies also docked. However, in recent decades, none of these smaller harbors attained the size of a true world-class commercial port. In 2013, Sultan Qaboos initiated a new project – the port of Duqm. At first glance, this venture hardly seems worth it: Duqm is not a natural seaport, it will take a considerable effort to build a seaport with space for 70 000 residents in the city. But the political situation has made the expansion of the southern port a very smart move, due to the fact that the port of Mina al-Fahal is situated directly on the Strait of Hormuz. Oman and Iran are located directly opposite of this strait; and not infrequently, freighters from the United Arab Emirates or Saudi Arabia are hampered on their way through the Strait of Hormuz by the Iranian Navy. Should the tension escalate between Iran, Israel and the US, there is a threat of a blockade of this sea route. Saudi Arabia and the UAE can bypass the dangerous strait using the new port in the south of Oman. Using pipelines, they can send their oil to the local Omani port, from which the oil can be shipped all over the world. Therefore, the construction of a second seaport became an investment in the future, in case the oil reserves run out. In this way, Oman can also profit from the oil trade of other nations, even if only as a trade hub. However, this at least creates jobs and a good deal of security in foreign policy.

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