Muscat Confidential Mentioned in Dispatches: Wiki leaks releases thousands of Muscat sourced US cables

Finally. After having made Muscat sourced US Diplomatic cables only a handful of the early cable leaks, Wikileaks has released the whole shebang.

Excellent.

There's some great stuff in there, and I'm still working through it.

And really nice to get an actual quoted suggested link for the President mention for Muscat Confidential in one one I found about Blue City and the legal case between the partners:

...

SUBJECT: AN AL-SAID LOSES HIS DAY IN COURT
REF: MUSCAT 188
-------
Summary
-------

¶1. (C) An investment group reportedly controlled by a
prominent member of Oman's ruling family failed to persuade a
Muscat court to remove a Bahraini investor from the
multi-billion dollar Blue City real estate venture. The
episode suggests that the Sultanate sees preserving its
reputation for judicial fairness and independence and its
image as an attractive site for foreign investment as a
higher priority than intervening in its legal system to
benefit a prominent member of the royal family. End Summary.

...


¶3. (U) Although only one Omani newspaper, the private Arabic-language daily "al-Azzamn," published a story on the verdict, popular English-language blog sites "Muscat Confidential" and "Muscati," as well as the Bahraini press, have written in detail about the dispute, which became public late last year. ...

Neat! The President reads Muscat Confidential!

These cables are perfect for students of US-Oman relations, Omani Foreign Policy, Miltary relationships, economics, strategic business, the FTA, man, you name it. The Omani twitterati are already long a buzz with the material.

And to start with a highlight cable, here is a complete summary by the US State Dept. on the Oligarchical "Big Families" of Oman: Zawawi, Zubair, Shanfari, Al Sultan, Bahwan, Kimji, ... so here it is. Our favourite Blue City royal businessman, astute investor HH Sayyid Haitham, gets a section too.

SUBJECT: OMAN, INC.: BUSINESS OLIGARCHS AND GOVERNMENT IN OMAN'S
ECONOMY

REF: A. 09 MUSCAT 845; B. 08 MUSCAT 540; C. 08 MUSCAT 501
¶D. 08 MUSCAT 430; E. 08 MUSCAT 384; F. 08 MUSCAT 256
¶G. 08 MUSCAT 188

Summary:
¶1. (C) Oman's business landscape remains dominated by a handful of
local families who work either in tandem with, or in the shadow of,
government-run enterprises. As the Sultanate's economy diversifies
away from petroleum into fields such as industrial production and
tourism, these families have parlayed their privileged positions
and government ties into developing new business opportunities.
While the government publicly has called for an increase in the
number and participation of small and medium-sized enterprises
(SMEs), the major role of the state and omnipresence of the large
trading houses will ensure these families' continued dominance as
Oman's economy continues to expand. End Summary.



An Oligarchy Takes Hold
¶2. (C) Oman's private sector is best described as an oligopoly.
After Sultan Qaboos assumed power from his father in 1970, a
handful of families came to dominate the private sector. These
families are similar in many respects: many come from humble
beginnings, most are not directly related to the al-Said ruling
family, but almost all owe their fortunes in part to ties to the
Sultan or members of his government. As Oman's economy developed
and evolved, these families extended their business reach to meet
the growing needs of the government, Omani consumers, and, more
lately, the tourism industry. As a result, they control
conglomerates that operate in a wide array of sectors, from
construction to cars, and from manufacturing to hotels.

¶3. (SBU) In recent years, Oman's government has encouraged the
development of industrial areas, most notably the northern port
city of Sohar, as well as large real estate projects. These
initiatives are part of a long-term effort to diversify the economy
and reduce the country's dependence on hydrocarbons, which
currently account for 79% of state revenues. The government's new
economic priorities - industrial ventures and real estate
development - have provided new opportunities for Oman's oligarchy.

¶4. (C) Given the state's substantial role in economic planning, it
is not surprising that the family with the closest relationship to
the Sultan - the Zawawis - is one of the country's richest. While
the Zawawi fortune remains large, it also has remained relatively
unchanged over time, according to post contacts. By contrast,
other private sector leaders - the Zubair and Bahwan families and
the Sultan's cousin, Sayyid Haitham bin Tariq al-Said - have become
more involved in new and growing sectors, raising their rank within
the business community's hierarchy.



The Zawawi Family - OMZEST Group
¶5. (C) The Zawawis, a merchant family with origins in Saudi
Arabia, have had a close relationship with the ruling al-Said
family for over a century. The relationship blossomed under Sultan
Qaboos as Oman's economy rapidly expanded. Omar Zawawi, who
attended Harvard in the 1960s and was trained as a physician and
holds an MD, is currently the head of the family and possibly the
richest man in Oman. He is also a member of the Sultan's "kitchen
cabinet," a handful of individuals who are not government cabinet
members, but have regular access to the Sultan and advise him on
key matters. Zawawi's brother Qais had a more visible role in the
government as Deputy Prime Minister until his death in 1995. Omar
Zawawi's official title, Senior Advisor for External Affairs, is
somewhat misleading, as he plays a highly influential role in
domestic economic policy making in addition to foreign policy
matters. He has an unmatched combination of acuity regarding
international affairs and direct access to the Sultan; his hand may
be detected in Oman's recent and surprisingly quick decision to
permit the transit of anti-piracy security teams (ref A.).



¶6. (SBU) Zawawi's company, OMZEST Group, is the umbrella for 75
wholly owned and associated companies with an estimated 4,000
employees. The group's activities include agriculture, banking,
contracting, manufacturing, and travel and tourism, among others.
OMZEST's key business, however, is manufacturing, from which it
derives approximately 43 percent of its revenue. (Note: OMZEST's
exact revenue and profits are not known. End Note.) OMZEST is
heavily involved in new manufacturing ventures at the burgeoning
Sohar port, which the government has targeted for development as
part of its drive to diversify the Omani economy. OMZEST, for
example, controls a 30 percent stake in Oman Methanol Company, a
joint venture that has built a $450 million methanol plant with a
production capacity of one million tons per annum (tpa). Oman
Methanol is in the midst of constructing a second plant, also
capable of producing one million tpa. OMZEST also holds a 10
percent stake in Alsig, a joint venture that owns an industrial gas
production facility in the Sohar port area with an initial
production capacity of 200 tons per day of nitrogen. The plant may
be upgraded over time to produce oxygen and other gases, depending
on demand from industries in the Sohar Port complex.



¶7. (C) OMZEST is a player in the banking arena, with a controlling
interest in Oman's third largest bank, Oman International Bank.
While it benefited, as did all Omani banks, from the liquidity
generated from high oil prices, as well as several government and
Royal Diwan accounts under its purview, the bank appears not to be
particularly well-run and therefore by local standards vulnerable
in the face of regional and international economic difficulties.
One banking contact noted that he would "never work for Oman
International Bank," while another complained about the
difficulties in working under the bank's micro-managing chairwoman
- Reem Zawawi, Omar's daughter.



The Bahwan Family - Suhail and Saud Bahwan Group
¶8. (C) The Bahwans, members of the Mukhaini tribe from the coastal
city of Sur, got their start as the exclusive agents for Toyota in
Oman, a right they received thanks to Sultan Qaboos' direct
intervention. Until 2002, brothers Suhail and Saud Bahwan jointly
operated the Bahwan group, most likely the second largest
conglomerate in Oman in terms of profits. While the brothers have
split the firm, the two new companies remain leaders in the
economy. Much has been made about the alleged bad blood in the
separation, but post contacts believe that it is overplayed, and
that the two companies remain somewhat aligned. One company
official noted to Econoff that while the brothers are fiercely
competitive, even with each other, they remain "family."

¶9. (SBU) The Suhail Bahwan Group appears to be the larger and more
diversified of the two. It employs approximately 10,000 people and
includes interests in engineering and construction, automobile
sales, telecommunications, software design, structural steel, and
chemicals and fertilizer products, among others. While the group
retains some ties to the original family automobile business as the
exclusive agent in Oman for BMW, Nissan and Renault, like OMZEST,
Suhail Bahwan has invested heavily in industrial projects,
including recent projects near the ports at Sohar and Salalah, as
well as in the National Bank of Oman, the country's second-largest
financial institution. The group is expanding its profile in
vocational training and education; partnered with Virginia Tech, it
is currently waiting for Ministry of Higher Education permission to
found Oman's fourth private university.

¶10. (SBU) Bahwan Engineering is a heavyweight in the local
economy, and has grown its business beyond Oman's borders by
establishing offices in Dubai and Abu Dhabi. It has participated
in the construction of a number of high-profile projects in Oman,
including LNG facilities (Oman LNG, Qalhat LNG), power stations
(Sohar, Barka, Ghubra), hospitals (Ibra), industrial plants (Sohar
Aluminum), banks (Central Bank, Bank Dhofar, Oman International
Bank), shopping malls (Msucat's two City Centre malls, along with
th city's thid largest mall, the Markaz al-Bahja), and hotels
(Muscat Intercontinental, Muscat Crowne Plaza).

¶11. (U) The company's industrial ventures include Suhail Chemical
Industries, which manufactures sulfuric acid in the Sohar
Industrial Area, and the Sohar Fertilizer Project, a $638 million
complex that includes an ammonia plant with a production capacity
of 2,000 metric tons per day (mtd) and two granular urea plants
with a combined production capacity of 3,500 mtd. The group also
plans to add 30,000 tons per year of structural steel component
manufacturing capacity at Sohar. Finally, Suhail Bahwan is an
investor in Octal Petrochemical, a U.S.-based firm which controls a
plant in the Salalah free zone that produces 30,000 tons per year
of polyethylene plastics and has plans for major expansion (ref D).


¶12. (C) The Saud Bahwan Group has approximately 9,400 employees
and annual sales of more than $3 billion. Growing in recent years
from a base of 3,000 employees, the company's primary business is
automotive and heavy equipment sales, as well as sales of
automotive parts and accessories. The group represents Toyota,
Ford and MAN commercial trucks, as well as Komatsu construction
equipment in Oman. In addition, the group acts as the exclusive
agent for Hertz Rent-a-Car. Patriarch Saud Bahwan died in late
2008, but as he had in recent years passed most executive authority
to his children, the company's direction has been relatively
unaffected. Sheikh Saud was long Oman's highest profile
(non-royal) philanthropist, one whose gifts included a generous
(anonymously given ) sums to The American International School of
Muscat (TAISM).



The Zubair Family - Zubair Corporation
¶13. (C) The Zubairs are ethnically Baluchi from the Huti tribe, a
group traditionally with a humble social status. However, the
family's long-standing personal relationship with Sultan Qaboos has
brought them tremendous wealth. The founder of Zubair Corporation,
Mohammed Zubair, is believed to have been a childhood companion of
the Sultan, as their mothers were close friends. Zubair became
Minister of Commerce in 1974, four years after Sultan Qaboos took
power, and remained in that position until 1983, after which he
became the Sultan's advisor for economic planning affairs. (Note:
While like Zawawi a "special advisor" to the Sultan, he is not as
close to Oman's ruler. And, unlike Zawawi, Zubair has generally
steered clear of politics, domestic or international, to focus on
his business interests. End Note.) While Mohammed Zubair remains
associated with Zubair Corporation, his son Hani al-Zubair now
serves as its chairman. The Zubairs have long been considered
locally the Sultanate's most cultured family; the family's private
collection of Omani arts and crafts are now housed in Oman's only
truly world-class museum, the Bait al-Zubair.

¶14. (SBU) Zubair Corporation has an estimated 2,400 employees and
is the parent company of 60 firms, subsidiaries, and associated
ventures. The company's divisions include automotive sales, art
and heritage, hospitality, telecom and IT, construction, retail
manufacturing, and advertising and publishing. Zubair represents
Volkswagen, Chrysler, Jeep, Mitsubishi, Peugeot, and Yamaha, among
other companies.

¶15. (SBU) One of the Zubairs' most prominent and successful
ventures to date is the Shangri La Barr Al Jissah hotel complex,
which opened outside Muscat in 2006. The Zubairs, in partnership
with the government, invested $180 million in the site, which
covers 124 acres and contains three hotels with a total of 640
rooms. Further development on the project has added luxurious
private residences, including apartments and villas. The success
of the Barr Al Jissah complex has encouraged more large-scale real
estate development construction in Oman, including projects under
construction at Sifah, Yenkit, and Blue City.

¶16. (SBU) The Zubair Corporation is dabbling in the Sohar port
industrial area as well. It holds a 10% stake in the Sohar Power
Company, the owner of the $550 million Sohar Power and
Desalinization Plant, which has a power generation capacity of 585
megawatts (MW) and desalinization capacity of 33 million gallons
per day. Recently, the Zubairs entered into a $30 million joint
venture with an Indian engineering and construction company, Larsen
and Toubro, to build a plant in Sohar that will manufacture
products for the offshore oil and gas sector.

¶17. (C) Post contacts report that the Zubair Corporation is
undergoing a shake-up in personnel to inject new blood into the
company. In 2008, Zubair appointed Giles Cunningham as the
company's new Chief Executive Officer. In a conversation with
Econoff, Cunningham viewed the company as a leading economic
powerhouse in Oman, but commented that it needed to gain focus in
determining which new opportunities to pursue. A former banker in
the region, Cunningham stated that the company's potential for
growth and the Zubairs' keen sense of business attracted him to
Oman.



The Sultan Family - W.J. Towell
¶18. (SBU) The Sultan family is an established Lawatiya Shi'a clan
(Ref B) that in 1866 founded W.J. Towell in partnership with the
company's namesake William Jack Towell. Towell, who is believed to
have been an American citizen, later, sold his share in the firm to
the Sultans in the 1890s. After Sultan Qaboos came to power in
1970, W.J. Towell managed some of the country's first major
infrastructure projects.

¶19. (C) The family's head is Kamal Sultan, who is now
incapacitated and serves as Honorary Chairman of the firm. His
son, Jawad Hussein Sultan, is Chairman. The company's main market
advantage is family member Maqbool bin Ali Sultan, who was a
director of the firm before he became Minister of Commerce and
Industry in 1991. Maqbool is well-connected in Oman's business
landscape, as he also serves as the Chairman of Oman Oil Company, a
primary investment arm of the government, and Chairman of the Sohar
Industrial Port Corporation, the landlord of the Port of Sohar. He
also is a close colleague of Ahmed bin Abdul Nabi Macki, who is the
Sultanate's powerful National Economy Minister, as well as the
Deputy Chairman of the National Resources Council, Chairman of Oman
Shipping Company, and Chairman of Oman Air.

¶20. (SBU) W.J. Towell currently has an estimated 1,000 direct-hire
employees and is involved in healthcare products, furniture sales,
automobile sales, cleaning services, construction services, real
estate, and grocery retailing and distribution, among other areas.
The firm also represents a variety of foreign companies in Oman,
including Mazda, Mars, and Chicago Pneumatic. Given the family
connection to Sohar, W.J. Towell has become involved in
industrialization efforts in the port city. The company drafted
the port's master plan, holds a 10% stake in Sohar Power Company,
and for years been the chief advocate for constructing a
multi-billion aluminum smelter near Sohar, a project that is now
being implemented as a joint venture of Abu Dhabi Water and
Electricity Authority, Oman Oil Company and Alcan. Towell is a
major property developer in Oman, with signature projects in the
expat-heavy neighborhoods of Madinat al-Sultan Qaboos and Shatti
al-Qurm, developments whose success has cushioned the cancellation
or postponement of additional residential and resort properties.



Al Sa'id Family - A Growing Force in Business?
¶21. (C) The royal Al Sa'id family has long had a notable, if low
profile, role in the private sector, but in recent years some
members have expanded their commercial activities. The more
traditional (less commercially minded) branch of the family is led
by the Sultan's paternal uncle, Sayyid Shabib bin Taimur Al Sa'id.
In 1982, Sayyid Shabib established the Tawoos Group, a diversified
firm with interests in telecommunications, agriculture, and oil
field supplies. Tawoos Group is now run by Sayyid Shabib's
half-brother, Samir Fancy, and has not significantly changed its
business in recent years. Tawoos' main division, Renaissance
Services, was one of the first family-owned companies to become
publicly traded on the Muscat Securities Market. Renaissance
focuses primarily on services, including facilities management,
cleaning and catering, IT services, and education and training.
Tawoos is interested in further expanding its overseas presence,
evidenced by the company's participation in an official Omani
commercial delegation to Baghdad in 2008 (ref C).


¶22. (C) The business interests controlled by Sultan Qaboos'
cousin, Sayyid Haitham bin Tariq Al Sa'id, the Minister of Heritage
and Culture and one of the possible successors to the Sultan, and
his brother, Sayyid Talal, appear far more dynamic than those
controlled by Sayyid Shabib. The brothers have interests in two
major firms - National Trading Company and Oman Holdings
International (OHI) - which are active in advertising and media,
telecommunications, tourism, energy services and construction,
among other sectors. National Training Company's financial results
are not available publicly.

¶23. (SBU) National Trading Company is the quieter of the two
firms. Established in 1982, the company - like the Zubair
Corporation and W.J. Towell - holds a 10% stake in the Sohar Power
and Desalinization Plant. It also has a 6.4% stake in Oman
Chlorine, a publicly traded firm that controls a chemical plant in
Sohar. It created "National Trading and Projects Company" in 2005,
which works closely with OHI in the fields of oil and gas, water,
power, and telecommunications.

¶24. (C) Sayyid Haitham and another brother, Sayyid Qais, are the
primary investors in the Muscat Hills Golf and Country Club, a
swank development near Muscat International Airport. The $110
million venture includes an 18-hole championship golf course
surrounded by a planned community. Phase 1 of the community is
expected to be complete by late 2009 and consists of 80 deluxe
villas around Muscat's first green golf course. The course itself
opened only after Sayyid Haitham shook up the project management
staff and reportedly brokered a deal with Muscat Municipality
Chairman Abdullah bin Abbas for use of the municipality's recycled
water.

¶25. (C) Sayyid Haitham's most important and visible project,
however, is the mega-real estate venture Blue City, in which he
shares a 30% stake with another investor. Blue City (Al Medina Al
Zarqa in Arabic), was announced as by far Oman's most ambitious
development, with a total expected cost of $20 billion. Its
original plans called for the construction of an entirely new urban
area, with residences, schools, health facilities and hotels for
200,000 people. The development was the subject of a legal battle
in which Sayyid Haitham's company "Cyclone" unsuccessfully tried to
acquire full ownership of the project from Bahrain-based AAJ
Holdings, which controls 70% of Blue City (Ref F). Its prospects
have been the subject of significant local gossip over the past
year, as ambitious plans for an urban center that would have
challenged Sohar and even Muscat have been gradually scaled back to
a more realistic (if still highly ambitious)
residential/resort/commercial complex. The project's difficulties
have, to an extent, tarnished Sayyid Haitham's reputation, if not
his prospects in the succession.


Ma'shani Family - Muscat Overseas Group
¶26. (C) The Ma'shanis are another family with close ties to Sultan
Qaboos, in this case through his late and much-loved mother; the
clan elder, Sheikh Mustahail bin Ahman al-Ma'shani, is the Sultan's
maternal uncle. He previously served as Minister of Social Affairs
and Labor and is now a State Advisor, as well as chairman of the
family company he started in 1974, Muscat Overseas Group. One of
his sons, Salim bin Mustahail, is an advisor at the Diwan of Royal
Court (a position that carries ministerial rank), as well as
vice-chairman of the family business. In July 2008, Salim was
appointed chairman of Nawras Telecommunications, the second largest
provider of cellular phone service in Oman. (Note: Qatar Telecom
is the majority shareholder in Nawras. End Note.)

¶27. (SBU) Reflecting the family's power base in the southern
Dhofar region, Muscat Overseas Group is the most powerful business
group in Salalah, Dhofar's capital. Its business operations
include trading, contracting, oil field supplies and drilling,
tourism, agriculture and real estate. It also is a 4% stakeholder
in Bank Muscat, Oman's largest bank.

¶28. (SBU) The firm's investments are channeled, in part, through
the Dhofar International Development and Investment Holding Company
(DIDIHC), where Sheikh Mustahail's son Khalid was appointed
chairman in 2008. (Note: The Shanfari family from Dhofar is also
a player in DIDIHC, with the family patron, Saeed bin Ahmen Al
Shanfari, previously serving as the chairman. End Note.) DIDIHC
holds a 30% stake in Bank Dhofar, 25% in Dhofar Insurance, 25% in
Salalah Medical Supplies Manufacturing Company, 16% in Dhofar
University, 14% in Dhofar Tourism Company, 10% in Salalah Port
Services Company, 5% in Oman Oil Company, 4% in Dhofar Power, and
an unknown stake in Octal Petrochemicals.



Shanfari Family - Shanfari Group
¶29. (C) The Shanfari represent the other prominent Dhofari family.
Shanfari Group Chairman Saeed al-Shanfari was a close contact of
Sultan Qaboos before his ascent to power. In 1974, Shanfari was
rewarded for his loyalty by being named Minister of Oil and Gas, a
position he held until 1997, when he was "retired" by the Sultan.
Post contacts report that his personal connection to the Sultan has
all but disappeared.

¶30. (C) Nevertheless, the Shanfari Group of Companies, established
by Saeed in 1970, remains a well-known trading house in Oman. In
addition to military sales, the group is involved in the
construction, transport and logistics, manufacturing, and tourism
sectors. It serves as one of the representatives of the Jeep and
Harley Davidson brands in Oman. (Note: the Shanfari Group had
exclusive rights to Jeep until 2005, when it reluctantly agreed to
share the brand with the Zubair Corporation after the U.S.-based
vehicle manufacturer complained of poor marketing efforts.
However, in 2008, Chrysler awarded Shanfari the right to market
Dodge, a brand previously reserved for Zubair. End Note.) The
Shanfari Group also holds the exclusive rights to a string of
luxury brands, such as Ferrari, Lamborghini, Maserati, and also
Saab, though one company official admitted to Econoff that those
are "just for show," since they generate negligible business in
terms of volume. Saeed Shanfari further retains significant stakes
in Dhofar-based projects through his stake in DIDIHC.

¶31. (C) Saeed's son Adil serves as the Shanfari Group's chairman
and CEO and is fond of the U.S., with several of his children
studying at a military school in Kansas. Another of Saeed's son,
Thamer, a U.S. university graduate and former participant in a
State Department International Visitor Program, was in 2008
designated for sanctions by the U.S. Treasury Department for his
questionable business dealings - which did not involve other family
members - in the Democratic Republic of the Congo benefiting
Zimbabwean President Robert Mugabe.



Darwish Family - Mohsin Haider Darwish (MHD LLC)
¶32. (C) The Darwish family is part of Oman's Baharna Shi's
community (Ref B), a group that is believed to have its roots in
Bahrain. The Darwishes have been notable merchants in the Gulf
since the late nineteenth century. Mohsin Haider Darwish is the
family's patriarch and managing director of the family company, MHD
LLC, while his two daughters, Lujaina Mohsin Darwish and Areej
Mohsin Darwish, serve as deputy managing directors (as such, they
are among the Sultanate's leading businesswomen). MHD, which has
an estimated 750 employees, remains an important player in the
local economy, but observers do not see it as being as dynamic as
top-tier firms such as OMZEST, Bahwan, and Zubair. MHD's divisions
include automotive sales, electrical goods and electronics
merchandising, chemicals, medical equipment and building materials.
In the automotive sector, MHD represents Jaguar, Land Rover and
Volvo. MHD retains a 10% stake in the industrial gas venture
"Alsig," in which OMZEST also has a 10% share.



Khimji family: Khimji Ramdas and Ajit Khimji
¶33. (C) the Khimjis are of Indian origin with commercial ties to
Oman that go back more than a century. The family lent money to
Sultan Qaboos' father, Sultan Sa'id; Sultan Qaboos granted Omani
citizenship to the Khimjis after he came to power. Notably, as
Hindus, the family traditionally has not intermarried with
non-Indians, but one member of the family, Rishi Khimji, is now
married to Sayyida Tania al-Sa'id, the daughter of Sayyid Shabib
al-Sa'id, the founder of Tawoos Group; Sayyida Tania is an
increasingly visible environmental activist and among the most
publicly active female al-Saids.

¶34. (SBU) Established in 1870, the family's operations are now
split into two - Khimji Ramdas and Ajit Khimji. Khimji Ramdas is
divided into four sectors: consumer products, lifestyle,
infrastructure, and projects and logistics. Much of its business
revolves around the retaining sector; it represents such prominent
brands as Proctor & Gamble, Ralph Lauren, and Samsonite. In
addition, the company acts as the exclusive agent for Pizza Hut,
and runs its own "Khimji Mart" consumer goods stores. The projects
and logistics division supplies military and firefighting equipment
to the government, while in the defense sector the company
represents Humvee.

¶35. (SBU) Ajit Khimji's business line takes a smaller, though
parallel, focus on consumer products, dining, and retailing. It
runs a number of well-known and highly regarded restaurants (among
the handful of non-hotel-based restaurants to hold liquor
licenses), , holds the franchise for Europcar, and serves as the
general services agent for Swiss (the national carrier) through its
travel agency. In addition, it owns an insurance company, several
coffee shops, bookstores, and dry-cleaning outlets.



State Reigns Supreme
¶36. (SBU) The strong position of Oman's leading families will
continue to benefit from the government's pre-eminent role in the
economy. At the forefront of the government's significant holdings
is Petroleum Development Oman (PDO), which s the country's primary
oil producer. Established in 1951, PDO is 60%-owned by the Omani
government and 34%-owned by Royal Dutch Shell, with the remaining
shares held by French-based Total and Portuguese-based Partax. PDO
controls 90% of Oman's reserves, 109 of the 130 fields, and the
lion's share of total production. In 2004, the government renewed
PDO's concession for another 40 years, though there was some
grumbling about the generosity of the extension, given falling
production rates and Shell's fudging of its Omani reserves
estimates, which greatly embarrassed the Omani government.
Nevertheless, the government has committed itself to making
significant investments in enhanced oil recovery techniques on
behalf of PDO during the course of the current five-year economic
plan (2006-2011), with an estimated investment in 2008 of $1.74
billion in petroleum production.

¶37. (SBU) In spite of the significant investment figures in PDO,
the government has moved to allow greater foreign competition in
the development of its petroleum fields. It is careful, however,
to retain a sizable equity stake in new oil-related ventures. For
example, complementing PDO's production is U.S.-based Occidental
Petroleum, which is investing over $3 billion in its Mukhaizna
field concession. In transferring the concession to Oxy from PDO,
the government acquired a 20% stake in "Occidental Mukhaizna"
through its Oman Oil operations. (Note: Occidental retains a 45%
stake, while Shell Oman has 17% and UAE-based Liwa Energy has a 15%
share. End Note.)

¶38. (SBU) In addition to its efforts in the petroleum sector, the
Omani government has substantially invested in the liquefied
natural gas (LNG) industry. In 1994, the government established
Oman LNG, which began operations in April 2000 with two 3.3 metric
ton pr annum (MTPA) LNG production trains. Heading the consortium
is the government, with a 51% stake, followed by Royal Dutch Shell
(30%), Total (5.5%), and Portuguese and Japanese equity holders.
In 2003, the Omani government formed Qalhat LNG to operate a third
train along side those managed by Oman LNG. Qalhat's primary
stakeholder is the government (47%), followed by Oman LNG (36.8%),
Union Fenosa (7%), and a collection of Japanese equity partners.
LNG shipped from Oman to points in Asia and Europe is carried by
seven tankers owned by the Oman Shipping Company, which is 80%
owned by the Ministry of Finance and 20% owned by the Oman Oil
Company. Domestic distribution of gas is handled by the Oman Gas
Company, which is 80% owned by the Ministry of Oil and Gas, and 20%
owned by the Oman Oil Company.



Investing through Oman Oil
¶39. (U) The Oman Oil Company plays a key role in the private
sector. In 1992, the government established Oman Oil to invest
surplus oil revenues both domestically and internationally. The
company is chaired by the Minister of Commerce and Industry, with
the Minister of Oil and Gas serving as the Vice chairman. Other
government officials, including the Secretary General of the
Ministry of National Economy and a Board Member of the Central
bank, round out the board. On the domestic front, in addition to
its stakes in Oman gas Company and Oman Shipping Company, Oman Oil
is involved in the Dolphin Energy Project (cross-border gas sales
to the UAE) and the Oman Oil Marketing Company (retail distributor
of gasoline).



¶40. (U) In 2002, the government entered into a 50-50 joint venture
with the Port of Rotterdam to create the sohar Industrial Port
Corporation (SIPC), which serves as the landlord for the industrial
complex. (Note: The Minister of Commerce and Industry serves as
the Chairman of SIPC. End Note.) Since SIPC's establishment, Oman
Oil has attracted a number of foreign participants into joint
ventures, including a polypropylene and aromatics plant with
Korea-based LG and an aluminum smelter with Canada-based Alcan.
Oman Oil is also a 20% owner in the Sohar Refinery Company, with
the Ministry of Finance holding an 80% stake.