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Oman's Port of Sohar has signed a development agreement with terminal operator Hutchinson Whampoa to establish a new 70-hectare container terminal for Oman International Container Terminal (OICT).

The agreement was signed by Sultan al Habsi, Chairman of the Board and Andre Toet, CEO, both representing Sohar Industrial Port Company (SIPC) and Andy Tsoi, CEO of OICT.

Construction of the terminal is expected to start in the first months of 2013, with a soft opening planned towards the end of this year. The first three new post-panamax cranes are expected to reach Sohar by this summer, and will be completed with four additional cranes towards the beginning of 2014.

The total investment in the project is estimated at over OMR 50 million (USD 129.5 million). Once completed, the expansion will lead to a capacity growth from 800,000 twenty-foot equivalent units (TEU) to 1,500,000 TEU.

Vessel capacity will also be increased. The current terminal can handle ships up to 6,500 TEU. Thanks to the deep draft in Sohar and the new expected cranes, the capacity will rise to 10-11,000 TEU.

"This puts Sohar in a very competitive position for shipping lines to bring their cargoes with direct lines to Oman and to consider Oman as a gateway hub for their transshipment cargo in the region," the Port of Sohar said in a statement.

SIPC and OICT also agreed to see the current expansion plan as the first step towards setting the foundation for long term-growth. The plan is to add, in 2018, an additional dedicated post-panamax terminal with a capacity of 2.5 million TEU, thus creating the largest container handling capacity on the Sea of Oman.

“This development is a major step forward for Oman,” commented Toet. “Currently, Oman is considered as a feeder destination, meaning that the cargoes are mainly brought to large container hubs in the region and then distributed to final destinations as Oman. With this increase of capacity, together with the cargoes that will be transferred from Muscat to Sohar throughout this year and the continued growth of Freezone Sohar, shipping lines will have the opportunity to skip these additional costs by calling Sohar directly. This cost advantage will eventually benefit the Omani supply chain. In short, the costs of imported goods could come down."

Tsoi commented: "As an additional benefit, Oman has the opportunity with this new development to facilitate the return of Oman cargoes that are now forced to use neighbouring ports, due to lack of deep-water container handling facilities. when these cargoes are able to be served again through Omani ports, it will significantly assist the trade in exploring new opportunities and create employment opportunities in the logistics sector of Oman. Currently, the Oman cargoes being served by neighbouring ports comprise about 200,000 TEU per annum, which is around 25 per cent of the total Omani domestic container market."

With the new Terminal C development in Sohar, the port has the opportunity to redevelop the current terminal infrastructure. As part of the current deal, it has been agreed that SIPC - operator of the Port of Sohar - will take back the current container terminal facilities to allow the construction of an agro-bulk terminal in order to serve the needs of the Public Authority of Strategic Food Reserves, to have a strategic storage facility for weeds in Sohar.

It will also allow Sohar to give focus to a new area of development: agro bulk handling. Anticipated other users of the terminal will utilize it for the handling and storage of grain, sugar, soybeans and other agro bulk products. Construction is expected to be carried out at the same time as the new container terminal development and it is expected to be completed during the course of 2014.

As the agro bulk terminal is not expected to consume all the berth capacity that becomes available, the Port of Sohar says it has also secured with this deal the possible future expansion of other activities, thus providing the opportunity to attract new and non-captive cargoes to the port in the future.