Iran is rapidly become a key element in Oman’s economic and political future. On Wednesday 15th February 2017 Iranian President Rouhani will pay a brief visit to Sultan Qaboos in the morning before flying to Kuwait, which is the next chair of the GCC. Both Oman and Kuwait have important Shia Muslim populations, in Kuwait these are focused in business; my employer in Saudi whose family is Shia being perhaps the largest private company in Kuwait.
In Oman however there is a generally fully meshed Shia population with ministerial appointments including the current Minister of Agriculture and Fisheries and a number of heads of government bodies.
The visit by President Rouhani comes after several previous meetings with Sultan Qaboos (in 2013, 2014) and meetings with the previous Iranian President Mahmoud Ahmadinejad in 2009 and before him Mohammad Khatami in 2004.
Historical links include rule of parts of the Iranian coast by Oman in the 18th and 19th c and Persian rule of parts of Oman, most notably under the Sassinids and later under Nadir Shah. Perhaps most critically the Shah of Iran poured military support into Oman during the Dhofar War.
These historical links go a long way to explain the willingness of both countries to co-operate, with Oman offering Iran access to Western politics and economies and Iran providing what is hoped for economic investment.
Critical to Oman’s industry and economy is a long talked about Gas Pipeline and this may form a key issue for the Ministers of both countries, especially Bijan Namdar Zangeneh the extremely well established Iranian Minister of Petroleum and his Omani equivalent Mohammed Al Rumhi on the 15th. Shell, Oman’s main foreign partner in carbon energy, and Total, Iran’s equivalent are involved in the pipeline and of course will handle the gas either side of it. The route from Jask in Iran to Suhar in Oman will connect with Oman’s existing gas network that stretches throughout the country as the main Electricity power stations are principally Gas powered.
The agreement covers a period of 25years and will enable Oman to be energy secure if, as seems possible, its own oil & gas reserves become unable to support the Sultanates own energy demans and provide export income. Part of the Iranian gas will be used for local consumption in Oman and the rest of it would be turned to liquefied natural gas (LNG) that would be exported to international markets. A foreign partner of both the pipeline and current LNG exports is Korea Gas Corp. An additional flow may extend to India if this separate ambitious political and technical comes to fruition.
The sheer volume of gas involved indicates its importance to Oman, the daily flow is planned to be 42million cubic meters a day; over a year this will be 15billion cubic meters (cbm) compared to Oman’s own current production of around 25billion cbm a year and the existing flow from Qatar of 200million cbm a year. Given that local demand is more or less met this probably means a substantial proportion of the Iranian gas can be exported.
In Ad Duqm, the rapidly growing port in central Oman the Iranian Khodro Industrial Group which is the Peugeot and Suzuki partner in Iran hopes to be a partner with the Oman Government owned Oman Investment Fund in a 20,000 vehicle a year car factory, doubtless powered by Iran’s gas. With office in London and plants in several other countries this company clearly has the ability to function successfully in Oman.