Oman agrees Saudi funding project for Duqm industrial area

Oman's ambitious Duqm industrial project - which it is hoped will be a major revenue generator during the sultanate's diversification drive - received a big boost this week, when Saudi Arabia agreed to a major investment in the port.

Oman News Agency said the Saudi Fund for Development had agreed to the financing of Duqm and other business projects in the sultanate to the tune of $210 million.

The state news agency said the grant was part of a $10 billion aid package Saudi Arabia agreed to pay Oman in 2011, when popular uprisings in the Arab world saw protests in the sultanate.

The money will be used to finance a road to the Duqm industrial area and to develop a new fishing harbour, the agency said.

Most will go towards will towards Oman's drive to grow its SME sector with $150 million earmarked for small businesses in the sultanate. 

Many have been struggling due to the oil price crash and the Oman government's austerity measures.

Duqm is the central to Oman's diversification plans as the country looks to modernise its economy which is reliant on volatile oil revenues.

The port aims to be a key trading hub in the Gulf, as well as building an industrial area, as well as exploiting fish stocks and nearby minerals for export.

Oman has been hit hard by a drop in oil prices and despite some signs of stabilisation in the market the sultanate still appears well short of balancing its budget.

Saudi Arabia agreed to a big financial aid project after protests erupted in Oman in 2011, the most serious unrest in the sultanate for decades.

Despite this, Oman and Saudi Arabia have differed on several key issues in the region. 

Oman retains close ties with Riyadh's nemesis Iran, remained neutral in the Yemen war, and has also refused to take sides in the Saudi-UAE-Bahrain blockade on Qatar.

The sultanate recently business and trading ties with Doha after the boycotting Gulf states and Egypt launched a blockade on Doha.

Iran is one of the biggest foreign investors in the Duqm project.

Oman hopes to harness its maritime heritage and key strategic location to develop ports along its coast.