INTERVIEW: Edwin Lammers, SOHAR Port and Freezone
A $6bn refinery, a new cargo terminal & expansion of its freezone are just some of the challenges that lie ahead for bosses at Sohar Port. Gavin Gibbon speaks to executive commercial manager Edwin Lammers
Edwin Lammers was fresh from a presentation at the Red Sea and Gulf Bunkering Conference (RESCON) 2014 when we meet at a hotel in Dubai.
The executive commercial manager for Sohar Port and Freezone is then due to speak in Singapore, followed in quick succession by engagements in Japan and Saudi Arabia.
He jokes that public speaking could become a credible choice for a career change in the near future. But then that would mean leaving a development that he has devoted the last six years of his life towards building.
A project which is already having a huge influence in shaping Oman’s economy and, judging by his enthusiasm, one that Lammers believes is reaching a critical juncture.
He says: “We have a number of projects next year which will finally see the light. In a port development, you always have a long lead time before something from the first contract comes to reality.
“In discussions with my former colleagues, who have come here for a three-or-four-year term, they never get to see the project they’ve been working on so hard. I’m in a lucky position in that I’ve been here for five or six years now and I have seen some of those projects.”
It has certainly been a momentous year for Sohar Port and Freezone, which is now one of the world’s largest port and freezone developments after an unparalleled period of growth that has resulted in investments totalling $15bn over the past decade.
In August, the Oman Government’s deadline passed to ensure all commercial activity in the existing port in the capital city Muscat was transferred to Sohar, which is strategically located just outside the Strait of Hormuz.
As well as boosting Sohar’s traffic, it allows for the redevelopment of the capital’s port into a destination for cruise liners.
Even before the move, Sohar’s port was welcoming a selection of the most recognised names in the maritime industry, including Maersk Line, as well as the renowned global shipping line Safmarine and Oman Container Lines – an expert in ship owning, chartering and management. Integrated logistics company Hyundai Merchant Marine has also outlined its intention to make Sohar a regular port of call.
A range of important developments have taken place within the port to ensure an easy transition, most notably the relocation and expansion of Oman International Terminal (OICT) – a terminal with a capacity to handle 1.5mn twenty foot equivalent (TEU) containers per year, which is operated by Hutchison Port Holdings.
This will be vital given the 300-or-so vessels that are set to dock at Sohar in 2015 as it allows them to send shipments through Sohar’s growing logistics hub.
Other investments will take place in the port’s Expanded Petrochemical Cluster through Oman Oil Refineries and Petroleum Industries (Orpic) and parent firm Oman Oil Company. They will make a combined capital investment of around $6.5bn over the next five years.
“There are a lot of activities going on next year and the year thereafter. If everybody is on site and there is a lot of work going on, it’s going to be quite interesting to see how those thousands of workers are building up our port further,” Lammers says.
Over the last 12 months, following the establishment of the freezone, attentions have been focused on creating the infrastructure for the first phase of 5km2, making it ready for construction, installing roads, lighting, fences, and ensuring all of the relevant legislation is in place.
Lammers comments: “There has been tremendous work and that has been quite successful to the extent that we have almost finished that first phase and it’s leased out. We’re now looking at phase two, where we’re going to look at another 1km2 of land that we want to make ready for new developments.”
And there are plenty of developments which have been planned. Lammers, who is currently working on budgets for next year, outlines a whole host of the aforementioned construction projects that are helping to drive the port’s growth.
One of these combines a food reserve, agribulk terminal, sugar refinery and the expansion of a cargo terminal, construction of which is due to begin at the start of 2015.
“We have just finalised the transfer of the container terminal to the new location, which has freed up space,” Lammers shares.
“We brought back the essence of the container terminal, which we then re-sold to redevelop the area into a strategic food reserve and agribulk terminal, a sugar refinery and the expansion of the cargo terminal.”
Tenders are being prepared for work on the agribulk terminal, where the initial focus will be on the silos, which take the longest time.
“We need to have the agribulk terminal in place [by] latest Q2 2017,” Lammers says, who adds that the plants will be housed within an area of 300,000m2.
The next challenge will be having the handling equipment available for the sugar refinery – it is hoped a start can be made importing raw sugar 18 months after construction starts. The final touches are currently being put to the designs.
Lammers says: “That’s just one project. Then we have the Oman Refinery Expansion project which will start at the end of this year. It’s a total $6bn investment to get a new refinery off the ground and they (contractors Daelim and Petrofac) are doing the earthworks as we speak on a 200ha piece of land, which they have completely levelled.
“The site preparations are done, so now it’s time to start moving the contractors on site to start putting the buildings up.”
When Lammers intimates the port will resemble a construction site over the next 12 to 24 months, he is not exaggerating.
An agreement has been signed with Oman Oil Company to establish a PTA plant, with building work due to commence on the 350,000m2 site in February.
Oman Procurement for Water and Power has also issued a tender for a new power plant at the port, with a view to awarding mid-2015 at the latest. And last, but by no means least, there is a reclamation project, which was already due to have started, but has been delayed.
“We have a candidate who might want to utilise the land that we reclaim with it and that would require some marine infrastructure there as well,” Lammers reveals.
He is also hoping the port can play a pivotal part in the new GCC railway – the $15.5bn network linking Oman in the south to Kuwait in the north, through the United Arab Emirates, Qatar, Bahrain and Saudi Arabia. Three companies have been shortlisted for the project management consultancy contract, with an announcement expected soon. But Lammers and his colleagues at Sohar Port and Freezone have already been planning for the potential impact the new line will have.
“We have done our homework, we are ready. We have designed and developed the layout as it would have to fit into our territory, how it would connect the freezone, how it would connect the port,” he said.
This includes proposals for a large shunting yard, with logistics facilities and an education centre or railway college.
“It’s our concession. It’s pivotal that the rail is being connected in the most efficient way, so why lose time on the consultant who needs to do all their stuff?
“We know what we want and how we want to do it and what is most feasible to develop.
“We said, let’s develop it ourselves… I wouldn’t say as a gift to those designers because it makes their lives easy, but they still need to do the detailed design eventually. It would save a lot of time,” asserts Lammers, before adding that he wouldn’t necessarily say it was an accepted part of the deal.
“We still need to discuss with the awarded contractor, but I think the discussions we had with Oman Rail Company on the subject were very supportive to our thoughts and discussions on how we should look at this type of development. I’m quite confident the blueprint will be very much the way it is connecting into the port,” he admits.
“It’s our area. Of course we would not doubt the professionalism of those companies going to win the tender, but we know very well how we connect to these things and optimise our infrastructure, so why not help the designers?”
While attracting tourism, trade and industry has been the hallmark of the port’s success, Sohar is also playing an important role in recruitment and in particular the employment of Omani nationals.
Lammers says that there will be 9,000 people working at the port at its peak – 3,000 of whom will be employed in the construction of the refineries alone. And this is going a long way to assisting with the Omanisation push.
“All those projects need to be managed and I think that’s where there is an opportunity for the Omanis to bring their skills into play,” Lammers rermarks.
“It’s nice to learn something but if you don’t have the big projects to put those skills into place, you will never grow to that next step.”