PORT CLUSTERS: THE SOHAR ‘BREAKAWAY PROJECT’ GREEN INITIATIVE

Scholars looking into clusters in general, and port clusters specifically, have come to understand that the development of such clusters is a path dependent process, in the sense that past developments in ports aff ect the future development path of these ports. Sohar’s industrial port complex has been mainly built around the availability of relatively cheap gas.

This has attracted major investments, amongst others, in steelmaking, chemical industries and an iron ore pelletizing plant. Given Oman’s relatively small gas reserves, as well as the increasing demand for ‘decarbonised steel and chemicals’ this historical development path no longer provides a solid basis for a vital port industrial cluster; indeed one could imagine a scenario in which the activities increasingly come under pressure, investments dwindle and the port industrial cluster becomes a liability for Oman’s economy, instead of an asset.

In other words, the cluster needs a ‘breakaway project’, that provides a new basis for the development of the port complex and reduces its dependence on gas. Recent news evidences progress with such a breakaway project: Jindal Shadeed, Hydrogen Rise, and Sohar Port and Freezone (SOHAR) have signed an agreement to evaluate the development of a green hydrogen plant in Sohar, to decarbonize Jindal Shadeed’s steel manufacturing plant. The hydrogen is produced from Solar energy, for which conditions in Sohar are favourable.

The Sohar Port Development Company sees this as a key step towards building a viable gas alternative that will encourage sustainable practices in all SOHAR industries and attract new firms, while for Oman this project has a high strategic value as it allows it to conserve gas supplies for other uses across the country.

In general, the business case for ‘breakaway projects’ is complex, as they are not building on established strengths. The ‘value case’ however (including the value creationfor society at large, lower emissions and the Oman economy, a sound platform for future growth), often is positive. Thus, governance becomes a key differentiator: clusters with a high ability to develop effective public private partnerships will forge ahead, while clusters where ineffective governance reigns fall behind. The progress of this breakaway project is therefore worth following.