Freezone Sohar's maiden venture commences operations

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Indian-Omani JV sets up oilfield warehousing and logistics facility

MUSCAT -- An Indian-Omani joint venture firm has commenced operations at Freezone Sohar (FzS), becoming the first tenant to set up shop at Oman's biggest and most ambitious free zone initiative on the Batinah coast. Oilfield Warehouse & Services LLC (OWS), a specialist in logistics and material management for the oil and gas industry, launched operations from a site within the sprawling FzS complex adjoining the Port of Sohar. Its successful start-up early on the development of Freezone Sohar is seen as a reflection of the potentially enormous investor interest in the free zone project.

OWS is a joint venture of Vizag-based Oilfield Warehouse & Services Limited (70 per cent), and a local Omani investor (30 per cent). The Indian firm, which is located at the Vizag Special Economic Zone (SEZ), is acknowledged as having pioneered the introduction of a unique brand of material management services to the oil and gas industry on the subcontinent. Its business model, developed around an SEZ and catering to the oil sector, has won the company a rare patent from the Indian authorities.

Speaking to the Observer, OWS Managing Director Vinay R Sharma (pictured), said the Sohar venture's successful launch within two months of the signing of a lease agreement was a testament to the free zone's huge appeal as well as the efficiency of the FzS management. "I was pleasantly shocked by the enthusiastic response that I received from the free zone management.

From my first meeting with them in late July and right through to the start-up of my project, they facilitated all the relevant requirements and formalities that made it possible for me to launch operations last month -- all under two months. I can't think of any free zone developer extending this level of personalised service. I'm indeed satisfied and happy about this investment in Freezone Sohar."

Sharma noted in particular the keen interest and support extended by FzS Chief Operating Officer Jamal T Aziz and Deputy Chief Operating Officer Neelima Vyas, among other senior executives, in paving the way forward to OWS's successful launch at Sohar. OWS has already developed a part of its allotted 10-hectare plot at FzS. Open yards have been constructed to make way for the arrival of oil and gas related hardware from around the world. Several open and closed warehouses will be built in future phases of the project's development, Sharma said.

OWS, the Managing Director explained, specialises in providing a holistic approach to the material management and logistical requirements of the oil and gas industry. By establishing warehousing facilities within the free zone, an area governed by zero duties and tariffs, OWS aims to offer clients the convenience of sourcing their specific hardware needs at significant lower freight and logistics costs, in addition to other duty savings that accrue by virtue of its presence at the free zone. The company also has the wherewithal to collect oil and gas related equipment from any port in the world and to bring it to Sohar for delivery at the client's doorstep anywhere in the region.

Underscoring the appeal of its unique business model, OWS has already clinched deals to cater to the needs of a number of Oman-based oilfield service providers, including companies associated with exploration and processing activities under way at offshore Block 18 in the Sea of Oman. OWS is now looking further afield to offer its services to companies not only around Oman, but elsewhere across the Gulf region.

Given Sohar's proximity to powerhouses Dubai and Abu Dhabi, among other regional oilfield services hubs, OWS is confident of attracting customers to its FzS facility. "At a time when oilfield companies are cutting costs as a result of the decline in international oil prices, service providers will find OWS an attractive business proposition," the Managing Director said.

For Sharma, a veteran of India's logistics and oilfield industries, the Sohar project marks another milestone in the development of a business model that at first was dismissed by industry sceptics as unviable. But the patent-winning concept's inherent business appeal has fuelled the company's phenomenal growth, with annual revenues climbing rapidly ever since operations commenced at Vizag SEZ in 2005.

Sharma has now set his sights on replicating his successful Vizag venture at other places around India. "We want to create a support infrastructure for the oil and gas industry based on best practices similar to the benchmarks set by the industry in the Gulf of Mexico and the North Sea. Our future plans are to develop a network of branches in India and around the world. With the new Sohar unit catering to the Middle East, our longer term goal is to open branches in Singapore, Aberdeen in Europe, Houston in the United States, and Perth in Australia."

Freezone Sohar is being developed by Sohar International Development Company (SIDC), a 50:50 joint venture between the Government of Oman and Port of Rotterdam, and SKIL Infrastructure Limited of India. Covering an area of 4,500 hectares, FzS will be developed in phases with the first phase of 504 hectares set to be operational from the third quarter of 2010.

By Conrad Prabhu

© Oman Daily Observer 2009