Over the past 18 months, the Sultanate of Oman has emerged as one of the most interesting projects markets in the region, offering good business opportunities for contractors, consultants and investors across a range of industries.
With about $177bn worth of projects planned or underway, the sultanate has a substantial pipeline of projects needed to support Muscat’s aims at diversification into logistics, tourism and manufacturing, as well as improving public services and infrastructure.
Muscat’s diversification drive was boosted in 2017 by the award of contracts worth $5.7bn on the giant Duqm refinery project. These underpinned a 31 per cent year-on-year jump in the value of projects awarded in Oman, and saw the country emerge as the region’s third biggest project market in 2017.
But Oman faces many challenges. Its projects market has seen considerable volatility over the past few years. From 2005 to 2013, project awards were worth between $6.5bn and $9.7bn a year. A leap in the value of awards in 2014 and 2015 prompted optimism about the future of the market. But activity slowed in 2016 due to cuts in government spending as a result of lower oil prices. That contributed to a general slowdown in economic activity, and underlined the need to diversify the economy away from its historic reliance on the oil and gas sector.
Muscat faces the tricky task of balancing the requirement to diversify with the need to ensure its budget deficit does not get out of hand. The pipeline of unawarded projects in Oman is running at over $126bn, but whether Muscat is able or willing to move ahead with all of its plans remains in doubt. Some major schemes, such as the national rail network, have been on hold for several years, with little sign they will be revived soon. The development of industrial facilities in Sohar and Duqm continues to move forward.
In Oman Projects 2019, MEED assesses the drivers of the Oman projects market and the opportunities the various sectors offer for international and local businesses. These opportunities and their challenges are analysed along with the political and economic environment.