Duqm is Oman’s Pathway to the Future

Oman’s “Vision 2040” economic plan, unveiled by the late Sultan Qaboos in 2018, outlines the national program of transitioning Oman from a petrostate to a sustainable, knowledge-based economy. To explore the progress made under this plan, I recently visited Duqm, a rapidly evolving port city with a central role in Vision 2040, located on Oman’s southeastern Arabian Sea coast in the Governorate of Al Wusta. 

Looking out onto the Indian Ocean, Duqm is situated along major shipping lines, setting it up to become an important East-West trade hub linking several continents. Omanis describe Duqm as the Sultanate’s “gateway to the world” and its pathway to their future in an increasingly interconnected world.

Duqm’s Emergence from a Backwater Coastal Town

Duqm has developed at an astonishing speed. Until recently, Duqm was rarely a topic of discussion outside of Oman. In fact, I learned anecdotally that even many Omanis had never heard of Duqm until its major development projects began to bear fruit. This is perhaps understandable. Only fifteen years ago, Duqm was merely a sleepy beach town, home to fishermen but little else of interest.

The area’s low profile began to grow after the ambitious “Special Economic Zone at Duqm,” or SEZAD, was established in 2011. Over the past 13 years, SEZAD has grown to three times the size of Singapore, with a population of 25,000. The area includes an airport, multiple hotels, a multi-purpose port with a dry dock, a fishery, a petrochemicals facility, a crude oil storage terminal, and health and education facilities. Duqm has grown steadily. When SEZAD was announced, Duqm’s population stood at only 6,000. In 2016, there were only three hotels, which collectively provided no more than 300 rooms. Today, there are more than a dozen hotels, increasing the economic zone’s capacity to host foreign investors and other visitors more than sevenfold. Oman’s stable political climate and currency have made it an attractive destination for foreign business, and SEZAD hosts companies from Belgium, Brazil, China, Cyprus, Denmark, France, Germany, India, Japan, and South Korea, among other countries.

Indeed, Duqm’s growth is predicted to continue, and new projects are already in the works. By 2026, a state-of-the-art green hydrogen production facility in Duqm is set to be operational. Such efforts to develop the green hydrogen industry in Oman are important to the country’s ambitions to take on the challenges of climate change and transition toward cleaner forms of energy.

The mining industry in SEZAD also has huge potential, given that the area is diverse with mineral resources ranging from limestone to dolomite and silica. Additionally, Duqm’s clean beaches with turquoise waters, proximity to camping areas, and mild temperatures—a rarity in the Gulf—can do much to attract visitors from near and far.

Gulf Arab Investments and Regional Connectivity

Kuwait and Saudi Arabia are also important investors and stakeholders in Duqm. Earlier this year, Kuwait’s Sheikh Mishal Al Ahmed Al Jaber Al Sabah came to Duqm to inaugurate “OQ8,” a petrochemicals facility and the largest joint Kuwaiti-Omani investment project in the two countries’ history. The two partners, the OQ Group of Oman and the Kuwait Petroleum International Company, have put roughly $8 billion into OQ8. Meanwhile, the Saudis have invested $135 million in a fish industries complex in SEZAD’s marine fishing port. Omanis are justifiably optimistic about much greater investments from across the Gulf Cooperation Council (GCC) coming into Duqm in the upcoming period.

An important part of Oman’s strategy for making Duqm successful is to ensure that as many governments, businesses, and individuals from around the world as possible have stakes in its success. Although businesses from the United States are not currently active in Duqm, Omanis hope to see American firms and investors becoming more involved in the city’s various development projects. Given Oman’s free trade agreement with the United States, there is great potential for American entities to play a significant role in Duqm’s future.

At this point, one issue holding Duqm back from reaching its potential is the fact that its airport only services flights to Muscat. When Duqm’s airport begins international flights to major hubs elsewhere in the GCC and further afield, it will be easier for Duqm to bring in more investors, businessmen, and tourists. Given that the airport meets all the physical requirements for international flights, Omani policymakers told me that they expect such flights to begin before long, further opening up Duqm to the world at large.

Duqm’s Position in the Middle East

Duqm obviously does not exist in a vacuum. For better or worse, it exists within the Middle East, making the regional security landscape vitally important to SEZAD’s future.

At a time in which the world is nervous about a full-scale war between Israel and Iran, as well as Houthi maritime attacks in the Red Sea and Israeli targeting of Iranian officials and high-ranking figures in the Tehran-led “Axis of Resistance”, questions about the Strait of Hormuz and the Bab al-Mandab’s security are sensitive. Located halfway between Muscat and Salalah, Duqm is quite far removed from the Strait of Hormuz and the Bab el-Mandeb. Moreover, unlike Dubai’s Jebel Ali, Qatar’s Hamad Port, Saudi Arabia’s Jeddah Islamic Port, and Kuwait’s Shuwaikh Port—all of which depend on the Strait of Hormuz or the Bab el-Mandeb for trade with the Far East—Duqm is not dependent on either of these chokepoints. This factor, along with its relatively safe distance from ongoing conflicts, adds to Duqm’s value as an alternative port on the Arabian Peninsula that all GCC members and many other countries can rely on for trade.

Moreover, as Houthi missile and drone attacks against commercial vessels and merchant ships off Yemen’s coast have severely interrupted global trade, Oman’s cordial relationship with the Houthis ensures that they have no reason to attack Duqm or any other part of Oman. Additionally, Muscat’s deep-rooted and warm relationship with Tehran indicates that Iran and its non-state actor partners would not target Oman if a wider regional war breaks out and engulfs countries across the Middle East.

Muscat’s geopolitical neutrality is important to the Omani brand, and thus the Sultanate’s friends-of-all foreign policy contributes to Duqm’s security. The Omanis intend to capitalize on this brand while developing and promoting Duqm as an Arabian Peninsula port city that enjoys significant flexibility from a security standpoint.

In spite of this, there is no denying that chaotic turmoil and armed conflicts elsewhere in the region can undermine the Sultanate’s plans for establishing Duqm as a major global trade hub. Even if Duqm itself is never the target of Iran, the Houthis, or any other actor, growing levels of insecurity in the nations and bodies of water near Oman—the Red Sea, Gulf of Aden, Arabian Sea, Gulf of Oman, Indian Ocean, and Arabian/Persian Gulf—will inevitably harm the prospects for Duqm’s development projects succeeding. 

Such dynamics contribute to the Omani leadership’s strong support for an immediate ceasefire in Gaza and restraint on the part of all actors in the Middle East in order to minimize risks of ongoing conflicts further escalating in ways that can harm the Sultanate’s economic development. In this sense, Oman joins the other GCC states in their grave concerns about conflict dynamics in the Levant and Red Sea spilling into the Gulf, at a time in which officials in the Gulf Arab monarchies seek smooth and successful economic transformations in preparation for the post-carbon era.

Ultimately, it can be said that regional conflict dynamics worry Omanis while also making them somewhat hopeful about Duqm’s opportunities to emerge as a relatively safe port on the Arabian Peninsula that is far less vulnerable to hostilities between different state and non-state actors compared to other ports in the GCC.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.