Sembcorp Industries to develop one of world's largest special economic zones

Through JV with Oman Oil Company.

Sembcorp Industries (Sembcorp) has announced that its newly-incorporated wholly-owned subsidiary, Sembcorp Utilities (Oman), has signed a joint venture agreement with Takamul Investment Company (Takamul), a subsidiary of Oman Oil Company, to develop centralised utilities facilities for the Duqm Special Economic Zone (SEZ), a new major industrial and commercial hub that is set to be one of the world’s largest special economic zones.

Under the agreement, Takamul and Sembcorp’s 65-35 joint venture entity, Centralised Utilities Company (CUC), will serve as a one-stop provider of a range of centralised utilities such as power, steam, water, sewerage treatment and on-site logistics on a captive basis to multiple industrial customers in the Duqm SEZ in southern Oman.

CUC’s customers will include anchor customer Oman Oil Company, which is developing a 230,000 barrels per day refinery targeted to begin operations in 2018 as well as a petrochemical complex on the site. CUC will have an initial share capital of OMR1 million (approximately S$3.2 million), of which Sembcorp’s 35% stake will be funded through internal resources.

Sembcorp and Takamul intend to invest in separate special purpose companies which will develop and own facilities supplying CUC with energy, water and other on-site logistics. Operations and maintenance of the facilities will be undertaken by CUC. Sembcorp and Takamul are currently working on the terms and details of the special purpose companies. This concept of a centralised utilities model will be the first in Oman. This project builds on Sembcorp’s considerable expertise and operating experience in this field. The company is a pioneer in centralised utilities. Under this unique model, multiple customers are offered an integrated supply of energy, water and on-site logistics produced by centralised facilities.

"By outsourcing critical utilities to Sembcorp, companies can focus on their core business a save on investment and operating costs. They can also be assured of reliable solutions which meet stringent environmental standards. From its beginnings in Singapore’s petrochemical hub, Jurong Island, this model has been successfully replicated in key industrial sites internationally," Sembcorp Industries said.

Including Duqm, Sembcorp’s centralised utilities model has now been implemented in 10 sites across Singapore, the UK, China and the Middle East. The company also lends its expertise to develop local resources in markets where it operates through skills and knowledge transfer programmes.

The signing of the joint venture agreement was signed by His Excellency Nasser bin Khamis Al Jashmi, Chairman of Oman Oil Company, and Tang Kin Fei, Sembcorp’s Group President & CEO. The ceremony was witnessed by Singapore’s Minister for Foreign Affairs and Minister for Law, K Shanmugam.

Mr Tang said, “We are very honoured to be selected by Takamul as their centralised utilities partner for this important new SEZ at Duqm. As the pioneer in one-stop outsourced energy, water and on-site logistics for multiple companies in energy-intensive industrial hubs, Sembcorp is in a good position to support the growth of the Duqm SEZ. We look forward to working closely with Takamul in making CUC a success. We also look forward to growing Sembcorp’s business in Oman as well as the Middle East, a target region for future growth for our Group.”

His Excellency Nasser bin Khamis Al Jashmi said, “This is a significant step in a very positive direction. The CUC will contribute to His Majesty’s vision of developing Duqm as a major national and international hub supporting the economic development of Oman. We are happy that Takamul and Sembcorp have joined forces and together we are confident of a very successful outcome.”

“Sembcorp was selected through a very extensive evaluation process of a number of utilities providers, because of their considerable expertise and operating experience in this field,” Nabil Al-Ghassani, CEO of Takamul, added.

Strategically located along the Gulf of Oman with a long coastline running along the Arabian Sea, Duqm has been targeted for development as a major maritime gateway for trade in crude oil from the Gulf, and as an important industrial and commercial hub. With a land area of 1,777 square kilometres and an 80-kilometre coastline, the Duqm SEZ will rank as the largest SEZ in the Middle East and North Africa region and one of the largest in the world. It will be administered, regulated and developed by the Duqm Special Economic Zone Authority, a financially and administratively independent government entity. Encompassing a sea port, city centre, industrial zone, tourism zone, logistics centre and an education and training zone, all supported by a multimodal transport system connecting the SEZ to nearby regions, the development of the SEZ is expected to take place in three phases from now until 2025.

Sembcorp’s presence in Duqm will mark its second project in Oman. Earlier today, Sembcorp celebrated the official opening of its first operation in Oman, the Salalah Independent Water and Power Plant. The largest and most efficient plant of its kind in the Dhofar governorate, the plant plays a major role in meeting the region’s growing power and water needs. It supplies 445 megawatts of power and 15 million imperial gallons (69,000 cubic metres) per day of desalinated water to the Government of Oman’s wholly-owned Oman Power and Water Procurement Company under a 15-year power and water purchase agreement.

The signing of the joint venture agreement with Takamul is not expected to have a material impact on the earnings per share and net asset value per share of Sembcorp Industries for the current financial year.