Oman targets doubling Duqm crude storage capacity

Oman plans to more than double onshore crude storage at Duqm to 10 million barrels within three years while considering two supertankers for floating storage, strengthening capacity outside the Strait of Hormuz as Gulf producers seek alternatives to the contested waterway.

State-owned energy group OQ is evaluating the purchase of two very large crude carriers, each capable of holding about 2 million barrels, Group Chief Executive Ashraf Hamed Al Mamari said. A decision is expected later this year after the company weighs elevated vessel costs against the commercial gains available from storing crude.

If approved, the ships would be leased for floating storage at Duqm and could be installed for that purpose in about six months. The plan would add as much as 4 million barrels of offshore capacity alongside the proposed expansion of OQ-linked onshore tanks from roughly 5 million barrels now.

Duqm’s location on Oman’s Arabian Sea coast allows crude to be stored, loaded and shipped without passing through Hormuz, the narrow entrance to the Gulf that has been disrupted by the Middle East conflict. The route’s vulnerability has intensified efforts by regional exporters to diversify storage, pipelines and loading points.

OQ’s plans come as oil movements across the region recover but shipping risks remain elevated. Middle East crude exports rose sharply in September as Saudi Arabia and the United Arab Emirates increased shipments, while tanker traffic through Hormuz also picked up. Freight costs for the largest crude carriers have climbed steeply amid security risks, vessel demand and changes in trade routes.

Al Mamari said Oman was open to discussions over pipelines that could use Duqm as an outlet, although such talks remained at an early stage and were being handled between governments. Saudi Arabia and Kuwait have been examining alternatives to established export routes, while the UAE already has infrastructure allowing crude to reach Fujairah, outside Hormuz.

Duqm has long been considered a possible terminus for pipelines carrying crude across the Arabian Peninsula. No such cross-border project has proceeded, but the renewed focus on bypassing Hormuz has increased the strategic value of terminals with direct access to the Arabian Sea and Indian Ocean.

The storage expansion is centred on the Ras Markaz crude oil terminal near Duqm, operated by Oman Tank Terminal Company, an OQ subsidiary. The facility is designed for long- and short-term storage and is connected to the Duqm refining complex, with marine infrastructure able to handle very large crude carriers.

Oman Tank Terminal Company says Ras Markaz has capacity of up to 26 million barrels across its broader terminal development, including storage allocated to the Duqm refinery. OQ’s current proposal concerns the onshore capacity being developed for its storage operations, with a longer-term ambition to lift the relevant tank farm to about 40 million barrels.

A tender process launched this year for the next development phase envisages eight additional crude tanks, each with nominal capacity of about 650,000 barrels. Together they would add approximately 5.2 million barrels, broadly matching the scale of the increase OQ is targeting over the next three years.

The terminal’s position also supports the 230,000-barrel-a-day Duqm refinery, operated by OQ8, a joint venture between OQ and Kuwait Petroleum International. The refinery began commissioning in 2023 and was formally inaugurated in 2024, creating an integrated crude-storage, processing and export complex on Oman’s eastern seaboard.

OQ has also moved to broaden Duqm’s role beyond crude. Oman Tank Terminal Company agreed with Dutch storage operator Royal Vopak last year to establish a joint venture in the Duqm special economic zone, with the OQ subsidiary holding 51 per cent and Vopak 49 per cent. The venture is intended to develop and operate energy storage and terminal infrastructure.