Oman’s SOHAR takes strides in sustainability

Oman

Emile Hoogsteden, CEO of the SOHAR Port and Freezone, talks to The Energy Year about the port’s critical importance to Oman and how the energy transition is impacting its activities. The SOHAR Port and Freezone is managed by SOHAR Industrial Port Company, a joint venture between the Port of Rotterdam and Asyad Group.

Can you walk us through the key aspects that make SOHAR Port a key asset for the country?
The first vessel entered SOHAR Port in 2004, and in 2022 we recorded 77 million tonnes of throughput. In less than 20 years, SOHAR has grown from no volume to an amount that actually put it on the map among the region’s key ports. Furthermore, it has attracted USD 27 billion in investments since it started operations and created more than 12,000 direct jobs and 24,000 indirect jobs. These are all elements that contribute to making the SOHAR Port a success story in the country.
We have laid solid foundations for the future regarding service quality, reliability and professionalism, and we represent a gateway for Oman, considering that around 75% of all imports and exports pass via SOHAR. Nonetheless, we are going through significant changes due to the energy transition, which we need to embrace. SOHAR is a fully integrated industrial and logistics hub enabling global business partnerships. It is the home of industries, from power plants, to refineries, to plastic and steel plants. All this industry means that the area is responsible for 25% of the national CO2 emissions.

Can you give us an overview of the port’s key activities?
In 2022 we grew by 11% having handled, as mentioned, 77 million tonnes of volume, mainly liquid bulk, dry-bulk, and containers. Furthermore, what has increased consistently is ship-to-ship operations, as well as marine services, such as bunkering, husbandry, crew changes and waste collection. On the one hand, we are trying to improve the services we already have. On the other, we want to expand our portfolio to offer more options and to be seen as a one-stop shop. Bunkering is a very interesting and growing segment in our port.
In July 2022, we signed a long-term bunker licence agreement with OOMCO [Oman Oil Marketing Company], which will provide marine fuels to vessels visiting SOHAR Port. It will enhance our position as the port of choice in the region for operators requiring bunkering services. We will be more attractive because shipping operators will no longer need to come here just for cargo handling and then move to another port to refuel.
Being an important port in mineral aggregates, we are seeing significant developments within the domestic mining sector. More terminal and storage areas will be needed in the future to serve this industry, and we are preparing ourselves to grow with this market segment to ensure we can be a valuable piece of the supply chain.

What is your perspective regarding the energy transition Oman has undertaken and its impact on the port’s activities?
The Sultanate of Oman has pledged to become carbon neutral by 2050, and this entails some important adjustments. First, we need to decarbonise our operations. Second, we need to be green. Finally, we need to look increasingly towards a more circular economy.
To clarify, decarbonisation and going green are complementary actions, but not synonyms. Decarbonisation refers, for instance, to the installation of scrubbers on all chimneys or systems to capture GHG emissions (CCUS). Going green is much broader and refers to these tools being efficiently applied to industry while simultaneously promoting new, alternative energy sources such as solar and green hydrogen.
These changes will have a paramount impact on the port, on how our tenants and customers will develop, and on the port’s capacity to attract businesses. The first priority will be converting existing industries from hydrocarbons-based to greener operations.
It is a long-term journey and there will be challenges, but we are aware that we are very well-positioned to help Oman move in this direction and support the country in transitioning towards a more circular economy.

How do you see the relationship between shipping, logistics and sustainability?
The new IMO interim guidelines for ships using methyl or ethyl alcohol as fuel open the doors for investing in methanol-fuelled ships. Methanol emerged as a major topic in the discussions around the IMO decarbonisation goals and alternative ship fuels. However, the question is whether there is enough methanol production or enough production of other alternative fuels (e.g., ammonia, synthetic LNG) to make ships run with less impact on the environment. In SOHAR, we intend to be ready to utilise LNG as well as biofuels as bunker fuel.
This is a major issue, but shipping operators are positioning themselves. Moreover, it’s not just a matter of having biofuels. What also matters is the way you operate. You must make sure that the assets you have are used as efficiently as possible, for example by ensuring there is no empty sailing or inefficient transport. Operators are working to optimise their modus operandi because the benefits will be double: they will benefit on the environmental side and on the supply-chain side in the form of less costs since you remove the “waste” and “dead times” from the system.

How might digitalisation help to optimise the supply chain as a whole?
Digitalisation plays an important role in this equation. In particular it boosts the transparency and visibility of the whole supply chain, where so many players are involved and where nobody has the bigger picture.
On our side, we launched the Routescanner platform, which was developed by Port of Rotterdam in November 2022, that will allow shippers and freight forwarders to view all available shipping routes in a single platform, making supply chains more efficient, transparent and sustainable. Basically, it allows users to build custom routes by showing them the fastest and most optimal routes via seaports, inland locations, road and rail. Then users can choose options with the lowest CO2 emissions and make decisions based on time, costs and environmental impact.
In short, we do not see digitalisation as a goal per se, but as a growth enabler that helps us be more customer friendly.

What are the elements that make SOHAR Port stand out in the domestic logistics sector?
We want to be the best port in the region, and we can achieve that by being the most reliable, most efficient and most valued port by customers. This means we need to have our procedures and operational systems in order across all aspects: data sharing, invoice accuracy, Customs and clearance activities, standardised processes, smart gates, service predictability and automated solutions (for example, smart lighting in the port), just to mention a few. SOHAR Port is a diversified import-export port that handles various types of goods where a lot of the imported volume is reworked and upgraded, whereafter a part of this volume is re-exported.
Our aim, as a port authority and landlord port, is to ensure the best conditions in terms of connectivity and infrastructure to all players operating in the port so they can perform to the best of their ability. Although the tenants operate the terminals, we consider ourselves to be an active developer. We are working hand-in-hand with them to improve efficiency and eliminate operational bottlenecks.
This bolsters our position as a reliable service provider for the shipping lines which come here. They know we can grant them efficiency and flexibility, which is another paramount aspect in a sector where schedules might change suddenly.

What are the major benefits that SOHAR Port provides to its customers?
An important advantage of SOHAR is that the port and free zone are really integrated. They are under one roof, one management, and the free zone is easily accessible via a bonded corridor. Thus, the port comes with an integrated free zone that holds all the benefits, such as tax benefits, labour benefits, etc.
Basically, ease of doing business is a key concept for us, as we provide a one-stop shop for all the permitting, regulations and services, speeding up bureaucratic processes with our integrated personnel.
Then, another paramount aspect for a port is to have the best connectivity, both overseas and overland. SOHAR Port is currently connected to more than 148 ports around the world, and we are expanding. At the same time, we are working to capitalise on the building up of inland connectivity, which aims to foster transportation multimodality not only within Oman but more importantly within the GCC region. At the end of 2021, the highway linking Saudi Arabia with Oman opened, and we are the closest port to the highway.
Infrastructure developments are increasing and include not only roads but also rail. The plan to build a new rail network connecting the UAE with the Sultanate of Oman recently saw a USD 3-billion investment agreement reached between Oman Rail and Etihad Rail Company.
To give customers the option of producing or manufacturing and then not only going overseas but also overland to the inlands is a significant benefit. We feel that the increasing number of initiatives supporting inland connectivity will contribute to the strength of SOHAR.

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