Economy, Business And Markets

Iran, Oman Forging Multisectoral Ties

Iran, Oman Forging Multisectoral TiesIran, Oman Forging Multisectoral Ties

Although the prospect of sanctions removal in early 2016 has recently created interest in Iran’s investment opportunities, close economic and political ties between Iran and Oman have embarked on a growth trajectory well in advance.

On November 2, only five days after a natural gas deal was concluded, it was announced that Sarooj, an Omani construction company, would be bidding for a water pipeline project, which involves laying over 400 km of water pipes in southern Iran.

The water pipeline project is the second phase of a larger project with Iranian Golgohar Investment & Development Company, which is the parent company of several subsidiaries in the mining, extraction and infrastructure development industries.

The director of Sarooj indicated that they had been in touch with Iranian counterparts and expect their cooperation to be successful.

Alireza Kameli, managing director of the National Iranian Gas Export Company, announced that a deal had been concluded with Oman for Iranian natural gas to be converted at Oman’s liquefied natural gas production plants.

Those plants are currently operating at 25% below their total capacity, so this unused capacity will be dedicated to Iranian gas.

Iran has agreed to pay the commissioning costs for additional production plants to bring Oman’s LNG production capability up to 1.5 million tons a year.

In addition, this deal is tied to a second stage, involving the construction of a 200-km underwater natural gas pipeline from the Kish gas field–off Kish Island in the Persian Gulf–to Oman, discussions for which started in 2012.

It is expected that eventually the capacity of the pipeline will reach 3 billion cubic feet a day.

Late October, an international trade exhibition was held at the Khuzestan International Exhibition Center in the province of Khuzestan in southwestern Iran, bordering Iraq and the Persian Gulf.

The event was jointly organized by Omanexpo and the Khuzestan International Exhibitions Company. More than 6,000 people attended and 65 companies were represented from several countries, including the UAE, Jordan, Brazil, Bulgaria, Italy and India, wrote Global Risk Insights–a self-proclaimed world leading online publication that provides analysis on political risk and geopolitics for the business community.

In addition to being hosted by an Omani company, nearly half of the companies were from Oman. A number of companies reported signing business contracts at the event.

The products and services at the exhibition ranging from beauty, food, steel, industrial, packaging, power cables, transformers, pipes and fittings to mechanical engineering, oil and gas, consultancy, banking and financial services attracted the attention of more than 6,000 visitors, according to the news portal Asia Today.

The exhibition is only one among many indicators of the recent strengthening of ties between Iran and Oman.

During the sanctions, the Omani exclave of Musandam, which is separated from the rest of Oman by the UAE and extends out into the Strait of Hormuz–only an hour from Iran by speedboat–served as a link to the wider economy, with nearly 200 companies in Musandam conducting business exclusively with Iran.

At the level of governmental policy, Oman’s strategic maintenance of ties with all of its regional neighbors, along with close ties to the United Kingdom and the United States, has resulted in Oman quietly becoming a central player in diplomatic relations with the Middle East.

Oman’s growing influence is tied to its close relationship with Iran, which it will likely pursue both economically and diplomatically over the next decade.

On Iran’s part, the relationship with Oman has allowed it greater participation in the regional politics and larger influence through a mediator.

Given the concern of many in Tehran about the cultural impact of opening up too quickly to the West, it is likely that Oman will continue to be a desirable partner and intermediary.