Oman's national energy company is planning a major expansion of oil storage capacity at Duqm Port, aiming to turn it into a critical energy hub in the event that the Strait of Hormuz is disrupted. This plan reflects the urgent need among Gulf oil-producing nations to bypass the Strait of Hormuz, which is accelerating the restructuring of regional energy infrastructure.
According to Bloomberg, Ashraf Al Mamari, CEO of Oman's national energy company OQ SAOC, said in an interview that the company is evaluating the acquisition of two supertankers for floating storage at Duqm Port, and plans to expand onshore crude oil tank capacity from the current approximately 5 million barrels to 10 million barrels within three years, doubling its storage capacity.
The Strait of Hormuz has been continuously disrupted by Middle East conflicts. The security risks at this most important global energy chokepoint have prompted major oil producers such as the United Arab Emirates and Saudi Arabia to actively seek alternative export routes.
Duqm Port is located along the Arabian Sea coast, outside the Strait of Hormuz. Its strategic location makes it a core node in the region's energy bypass strategy. The advancement of related expansion plans will have a profound impact on crude oil trade flows and the tanker freight market.
Floating Storage Plan: Decision Expected This Year, Installation Takes About Six Months
The floating storage plan under evaluation by OQ involves acquiring two supertankers, each with a storage capacity of approximately 2 million barrels, adding a total of 4 million barrels of floating storage capacity.
Al Mamari said the decision will be made later this year, when the company will weigh the high cost of vessel acquisition against the potential returns from oil storage. Once the decision to purchase is made, converting the supertankers into floating storage facilities will take approximately six months.
On the onshore storage side, OQ plans to increase crude oil tank capacity at Duqm Port from approximately 5 million barrels to 10 million barrels within three years, with a longer-term goal of ultimately expanding onshore storage to approximately 40 million barrels. If this long-term vision is realized, Duqm Port would rank among the world's major strategic oil storage centers.
For customers, storing crude oil at Duqm means they can bypass the risky shipping through the Strait of Hormuz and more conveniently withdraw the crude oil they need, thereby reducing supply chain disruption risks.
Pipeline Alternative Route: Intergovernmental Discussions at an Early Stage
Duqm Port has long been considered a potential terminus for a pipeline crossing the Arabian Peninsula, which could handle crude oil exports from oilfields in Saudi Arabia and Kuwait, but no specific project has materialized to date.
After the Strait of Hormuz was disrupted, both Saudi Arabia and Kuwait said they are exploring pipeline alternatives but did not disclose specific plans. Saudi Aramco CEO Amin Nasser said the company is seeking alternatives beyond traditional export routes in the Red Sea and the Persian Gulf. The UAE plans to add a pipeline at the Fujairah oil hub outside the Strait of Hormuz.
Al Mamari was cautious in his remarks. "As far as pipelines are concerned, Oman's message is that we are certainly open to it, but the discussions are still at a very early stage," he said. He added that the consultations are currently being held at the intergovernmental level, and he does not yet have specific details.
Duqm Port also hosts a refinery operated through a joint venture with Kuwait National Petroleum Company. This existing cooperation foundation provides certain industrial synergy conditions for the advancement of future pipeline projects.
Freight Rates Surge, Highlighting Strait of Hormuz Risk Premium
Ongoing Middle East conflicts continue to elevate tanker operational risks, and the shipping market has seen significant price anomalies.
According to Bloomberg, rents for Very Large Crude Carriers (VLCCs), the largest tankers on the Persian Gulf-to-China route, once soared to more than $1 million per day. Meanwhile, some oil-producing countries have chosen to force their way through the Strait of Hormuz with their ships' Automatic Identification System (AIS) transponders turned off to avoid potential risks.
Soaring freight costs and increasingly prominent shipping security risks are precisely the core drivers behind OQ's accelerated push for Duqm storage expansion. For crude oil buyers, holding reserves at ports outside the Strait of Hormuz means they can flexibly allocate supply without relying on high-risk, high-cost transit through the strait, a value that is becoming increasingly prominent in the current geopolitical environment.
OQ Simultaneously Pursues African Expansion and Asset Listing Plans
In addition to the Duqm expansion, Al Mamari also disclosed several of OQ's strategic initiatives.
In upstream exploration, OQ is seeking to acquire oil and gas exploration and production rights in African countries including Angola, Algeria, and Libya. Among these, the company is negotiating a natural gas exploration agreement for Block 24 offshore Angola, hoping to complete the signing next year, and will use this as a starting point to further expand its African business, covering upstream, downstream, trading, and renewable energy sectors.
On the capital operations side, OQ is evaluating a plan to sell equity in its refining and petrochemical businesses, which could be launched as early as 2027. Al Mamari said the company does not plan to conduct any initial public offerings next year.
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