Oman plastics project to support local economy

Omani officials claim that a new plastics project stands to create 12,000 jobs for citizens.

A November press release shows the Liwa Plastics Industrial Complex (LPIC) taking shape at Sohar Port, a trade area located strategically between Dubai and Muscat.

The $6.4 billion project is said to be the port’s biggest ongoing improvement, and one that will help to energize the region’s manufacturing economy.

In a recent address, Henk Pauw, general manager of the government-owned petrochemical firm Orpic, said 25,000 will be involved on two sites: one at Sohar Port and another at Fahud, where a natural gas extraction plant will be located. A 300-kilometer liquid pipeline will carry natural gas to LPIC’s polymer and steam cracker infrastructure in Sohar Port.

Pauw projected positive cash flows around $100 million per month and estimated the operation will go online in early 2020.

Industry resources show a bid process moving to house a nitrogen gas plant for the project.

“This process is a key milestone to our project,” Pauw said in a written industry statement on contractor operations. “All the contractors were required to demonstrate their knowhow on projects with similar size, nature and complexity, along with their international experience with the generation of in-country value considering the legacy that we want to create to Oman.”

Pauw said the project will also offer downstream opportunities for small to mid-sized businesses in the region. Partners will need to be found to ship as estimated 1.4 million tons of polymer per year.

“We have intensive discussions to make sure we have those containers for shipping as full containers and empties on the way back,” Pauw said.

What are the prospects for this industrial move, and what is behind Oman’s investment in plastics?

Dr. Gautam Mukerjee is the director of the economics program and associate professor of economics at the University of Pittsburgh Bradford.

“Dependence on oil has unsettled these economies,” Mukerjee told Gulf News Journal Wednesday. “They are trying their level best to address economic problems.”

In a way, Mukerjee said, moves to diversify the economy in GCC nations like Oman are similar to efforts related to U.S. infrastructure investment.

According to Mukerjee, true job creation can help iron out problems such as the shortfall in social program funding that some Gulf states are facing. However, he believes the effort needs to be genuine, and focusing on GDP would be a mistake.

For real growth, those handling the sovereign wealth funds of GCC countries need to understand that markets cannot address all of their problems automatically, Mukerjee stated.

“GDP does not address the problems at the ground level,” he said.

Company literature promoting the Liwa complex says the project will enable Oman to produce polyethylene, and that this helps to leverage existing Omani crude oil and natural gas markets while also enhancing Orpic’s operational diversity.

The company is working with other partners in the area to keep the ball rolling on a major industrial innovation for the Gulf Coast community.