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RULSJGA/COGARD HQSUPRTCOM WASHINGTON DC

C O N F I D E N T I A L MUSCAT 000147 
 
SIPDIS 
 
C O R R E C T E D C O P Y  (ADDRESSEES) 
 
E.O. 12958: DECL: 2019-02-24 
TAGS: EWWT ECON ETRD MOPS PREL PHSA MU
SUBJECT: OMAN CONTINUES BIG  PORT PLANS 
 
CLASSIFIED BY: Gary A. Grappo, Ambassador, Department of State, Embassy Musc 
 
at; REASON: 1.4(B), (D) 
 
¶1. (C) Summary:  Said bin Hamdoon Al-Harthy, the Undersecretary for 
Ports and Maritime Affairs at the Ministry of Transport and 
Communication (MOTC), met with DCM, poloff and commercial officer 
on February 17 to discuss port development and access in Oman. 
According to al-Harthy, the Government is continuing the ambitious 
development of a major new port at Duqm despite its isolated 
location and uncertain economic conditions.  Al-Harthy pledged to 
review issues related to USG port access for International Ship and 
Port Facility Security (ISPS) compliance visits and Port Integrated 
Vulnerability Assessments (PIVAs).  While the government proceeds 
at full speed on Duqm, the future of Port Sultan Qaboos in Muscat, 
which has experienced tremendous growth in traffic, remains 
unclear.  Sohar will not entertain military ship visits because of 
capacity constraints at this time.  End Summary. 
 
 
 
Duqm 
 
-------- 
 
¶2. (C) Al-Harthy spoke at length about Oman's plans for the port at 
Duqm, located roughly midway between Sur and Salalah.  He stated 
that the government believes the new port occupies a very strategic 
location, not just for Oman but for the entire GCC.  Although not a 
naval base, al-Harthy said that the Royal Navy Oman (RNO) would 
have significant dedicated space at Duqm and that it would be a 
primary port of call for naval vessels as it would have good 
facilities for both Omani and foreign ships.  The Royal Oman Police 
Coast Guard (ROPCG) would also have a presence in Duqm. 
 
 
 
¶3. (C) Al-Harthy elaborated that work is currently underway on two 
dry docks at Duqm, measuring 400m x 100m and 400m x 80m, which are 
scheduled to be completed in 2010 and will be the primary focus of 
the port.  He confirmed that a South Korean company, Daewoo 
Shipbuilding and Marine Engineering, is constructing the dry docks 
and will also operate them (working for the 100% government owned 
firm, Oman Dry-Dock Company) when complete.  He further outlined 
plans to create additional space and infrastructure at the port to 
accommodate any foreseeable expansion for the next "40 years," 
while keeping a 10 km non-developed "buffer zone" around the port 
to facilitate proper security.  Duqm currently has a 4 km long 
breakwater that accommodates a 2.2 km berth and a 700 meter berth 
and has been dredged to accommodate a depth of 18-19 meters. 
Al-Harthy noted that there are plans to add facilities for 
petrochemicals and for coal importation if requested by the 
government.  [Note:  The government is reportedly considering the 
construction of a coal-fired power plant at Duqm.  End Note.]  He 
predicted the port would be completed on schedule in 2012 and added 
that the government was in the process of requesting proposals from 
private businesses to operate the port, which are due at the end of 
March. 
 
 
 
¶4. (C) Although his department is not responsible for development 
in Duqm outside the port, al-Harthy noted that there is an 
interagency working group on the Duqm region that meets weekly.  He 
acknowledged that Duqm is at least a six hour drive from Muscat by 
car, or about 10 hours by truck.  He accordingly confirmed that the 
 
long-term plan is to put in a rail line from the northern port of 
Sohar, through Barka and Muscat, to Duqm.  The initial phase of the 
planned railroad, however, would be between Sohar and Barka. 
[Note:  Oman's first railroad is under study by a Paris-based 
international consultancy; there have been no calls for tenders or 
firm commitment of financial resources at this time.  End Note.] 
Al-Harthy said that the road infrastructure to Saudi Arabia and the 
UAE would have to be greatly improved to link Duqm to both 
countries, especially if it were to become a viable alternative to 
ports inside the Gulf for vessels carrying cargo into and out of 
GCC countries.  He also commented that the Sultan personally wanted 
significant development in and around Duqm, in part because there 
is no other commercial or economic activity in that region of Oman. 
[Note:  Oman's Minister of National Economy announced on February 
19  that the government was proceeding at "full speed" on the 
development of Duqm and would expend up to $1.8 billion for this 
purpose despite a slowing economy and a projected drop in oil 
revenue.  End Note.] 
 
 
Port Sultan Qaboos (PSQ) 
 
-------------------------------------- 
 
 ¶5. (C) Al-Harthy stated that the government has not yet taken a 
decision about what to do with PSQ in Muscat.  He shared that there 
was a group currently working on a study to determine the best use 
of that facility.  He thought that it might be turned into a "city 
port" focused on tourism, and said that a new tourism/passenger 
terminal would open at the port on March 29.  Confirming what we've 
heard from military sources, al-Harthy stated that the ROP Coast 
Guard presence in Muttrah next to PSQ will be moving to a new 
facility in nearby Sidab. 
 
 
 
Barka, Sohar, Salalah 
 
-------------------------------- 
 
 ¶6. (C) Al-Harthy said he had heard speculation of port development 
at Barka, but that this was not true.  The only thing that might 
happen in Barka, he added, is the creation of a dry dock facility. 
[Note:  Barka is approximately one-third the distance between 
Muscat and the northern port of Sohar.  End Note.]  As for Salalah, 
he thought it would continue in its role as a major transshipment 
port as the government proceeded with the current plan to add 
berths 7-9.  He confirmed what poloff has been told by port 
officials in Salalah -- that they intend to move the fishery port 
from its current location within the port of Salalah to a location 
much further away.  Al-Harthy noted that as a matter of security 
policy, the government prefers to have fisheries far away from 
Oman's main ports. 
 
 
 
¶7. (C) Al-Harthy confirmed that the Port of Sohar is still not 
complete.  When asked if a lack of available power was slowing 
development in Sohar, he admitted that a dearth of natural gas to 
produce electricity was a problem, but commented that this issue 
was "a headache for someone else."  He further replied that 
"electric companies" have promised to provide power as needed, but 
do not want to overdevelop capacity.  Al-Harthy expressed a strong 
preference for not having any navy vessels in Sohar for some time, 
as dredging and construction are still in progress and there is 
limited capacity. 
 
 
 
Port Access 
 
------------------ 
 
¶8. (C) Al-Harthy confessed to holding up post's port access 
requests for both ISPS and PIVA visits, claiming that he needed 
additional information to approve the requests.  Poloff explained 
the purpose of each type of visit and agreed to send over more 
information to facilitate his understanding.  [Note:  These 
documents were sent to al-Harthy on February 18.  End Note.]  He 
appeared willing to consider the new information and find a way for 
the USG to conduct these required assessments.  He also confirmed 
that the Office of Sea Affairs, in his department, was the 
designated authority for ISPS. 
 
 
 
Piracy 
 
--------- 
 
¶9. (C) Asked about the MOTC's role in anti-piracy efforts, 
al-Harthy responded that the MOTC participated in government 
discussions on this subject, and had attended the recent IMO 
anti-piracy conference in Djibouti.  He made clear, however, that 
the Ministry of Foreign Affairs (MFA) had the lead on this issue. 
 
 
 
Industry Insights 
 
 
------------------------ 
 
¶10. (C) Some of the information provided by Al-Harthy was at odds 
with a December 17, 2008 conversation between poloff and Captain 
Talib al-Wahaibi, the Port Facility Security Officer at PSQ in 
Muscat.  Al-Wahaibi thought the Duqm port project would be complete 
in 2017 or 2018, based on industry information and the contracting 
process with PSQ.  He noted that, in general, ports in Oman sign 
30-year contracts with the government, but when the contract for 
PSQ came due in 2006, the government signed only a 1 year 
extension, a practice it repeated in 2007.  In 2008, however, the 
government signed a 10-year contract, which al-Wahaibi noted would 
correspond with a 2017-2018 completion date for Duqm.  [Note:  The 
large discrepancy in dates may point to a difference in their 
definition of "complete."  End note.] 
 
 
 
¶11. (C) Al-Wahaibi said that Port Qaboos has the official capacity 
to handle 6,000 containers at one time, yet there were currently 
22,000 at the port.  Because of congestion, trucks may wait up to 
3-4 hours to go into the port to pick up a container;  at times the 
port had to move 10 containers to access the one required.  He 
explained that three years ago, in order to address the issue of 
overcrowding, the port company completed expansion plans to add 
significant space, going from 280,000 twenty foot equivalent Units 
(TEU) per year to 1 million TEU/year.  Since then, according to 
al-Wahaibi, the port has completed all the necessary studies and 
has the funding to build.  The government, however,  has not 
approved the expansion and has not given an explanation for its 
decision. 
 
 
 
¶12. (C) While he acknowledged that more business is generally good, 
al-Wahaibi said it was "bad news" if you are the person who has to 
"figure out where to put everything."  He gave the example of the 
port having to back out of a contract with Singapore due to lack of 
capacity to fulfill the terms of the agreement.  When the port 
signed the contract, it had anticipated building for expansion, but 
without new space, it was "impossible"  to honor its contractual 
commitments.  Consistent with al-Harthy on this matter, al-Wahaibi 
opined that the government plans to turn Port Qaboos into a tourist 
port and move the port's import/export operations to Duqm when it 
is complete. 
 
 
 
US Navy Ship Visits 
 
----------------------------- 
 
¶13. (C) As a former ship captain and sailor, Captain al-Wahaibi 
clearly understood the financial benefit of having a U.S. naval 
ship dock at PSQ.  However, he said, the port no longer has the 
space to grant access to U.S.military vessels.  Al-Wahaibi 
explained that the only berth suitable for U.S. ships at PSQ is 
berth 3, which is "constantly occupied."  In earlier times, the 
port had one cement clinker a month coming to that berth.  Now, he 
said, it has five or more a month so  that there is often one 
berthed and one anchored waiting to take its place. 
 
 
 
¶14. (C) Martijn Vanderlinde, the CEO for the Port of Salalah 
Corporation, told poloff on January 31 that U.S. naval vessels are 
"always welcome" in Salalah, as long as there is space.  He added, 
however, that these ships do not generate much revenue for the 
port, so the visits are not necessarily a high priority.  He also 
noted Salalah's proximity to the piracy focus areas in the Gulf of 
Aden and remarked that having naval vessels in port frequently 
contributed to the port's goal of being perceived as a "safe port" 
within the industry. 
 
 
 
¶15. (C) Comment:  Given the government's vision and commitment 
concerning port development in Duqm, Post urges Washington to 
seriously consider seeking to add the new facility to the 2010 
U.S.-Oman Base Access Agreement renewal agenda.  While Al-Harthy 
 
 
was confident that Duqm would possess a first-rate port, he 
appeared relieved that providing the surrounding infrastructure, 
including transportation links and power generation facilities, for 
Duqm and other Omani ports was not his responsibility.  He also did 
not seem to have a firm grasp on how goods would move into and out 
of the Duqm area given its isolated location far from major 
population centers.  Since al-Wahaibi outlined the situation at PSQ 
for us in December, all ports in Oman have seen a decrease in 
business due to the global financial crisis.  According to 
contacts, business at the port of Salalah is down 21% over this 
time last year.  Even with this decrease, however, congestion will 
likely continue to pose a problem for U.S. Navy ship visits.  End 
Comment. 
GRAPPO 
 
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