Petroleum Development Oman signed Thursday a $1.2 billion deal with Japan's Nippon Steel & Sumitomo Metal (NSSM) to further develop the southern port of Duqm, a statement and official media said.
Under the five-year deal, PDO would obtain from Nippon Steel "piping for its drilling operations" and "a new supply yard in the Duqm Special Economic Zone," the Omani company said in a statement.
Oman announced in 2008 plans to build a port and shipyard in Duqm, on the Indian Ocean, to handle ultra-large crude carriers and compete with Dubai's Jebel Ali free zone.
The sultanate, a member of the six-nation Gulf Co-operation Council, derives 79 percent of its revenues from oil, of which it produces only about one million barrels per day.
The non-Opec member said this month it would need to borrow money on local and international markets as it announced its 2017 budget with a projected deficit of about $7.7 billion.
Oman hopes that Duqm, which is still under development, will be a means to help it diversify revenues beyond oil. Yahiya al-Jabri, chairman of the Duqm Special Economic Zone, said the contract signed with Nippon Steel would have "an important impact on the port and the economic zone", state news agency ONA reported. PDO managing director Raoul Restucci said the deal "will spur the growth of Duqm and attract even more business as the port demonstrates its ability to handle major operations.
"Every year, we drill 600 wells across our concession area and all the piping for that will be managed at Duqm," Restucci said in the statement released by PDO. The Omani government holds a 60 percent stake in PDO, with the rest held by the Shell Group (34 percent), Total (four percent) and Partex (two percent). PDO says on its website that it accounts for "about 70 percent" of Oman's crude-oil production and "nearly all of its natural-gas supply".
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