Oman's non-oil exports to the US to increase 500 percent

Worldwide sales of APET, or amorphous polyethylene terephthalate, were approximately US$2.25 billion in 2006, mostly in the US and Europe.

Octal, which started operations at Salalah Free Zone in December 2006, has invested more than US$300 million in proprietary technology and custom-engineered production lines. The company plans to become the world's largest producer of APET sheet packaging, with 20 per cent market share, and the Middle East's largest producer of PET resins.

Nicholas Barakat, Managing Director of Octal Holding, a closed stock joint company, said: "By mid 2008, Octal will have sales of US$500 million per annum, and with a strong equity base we're in position to expand as needed."

Octal's parent company Chemlink Capital Limited and Pound Capital Limited, both US-based private investment firms specialising in downstream petrochemical projects, have provided the initial funding along with institutional and individual investors in Oman, Saudi Arabia and Kuwait. Bank Muscat is the financial advisor to the project.

Barakat said: "The most rewarding thing is that we are doing all this from Oman. This is a local company, with over a third of our 75-strong workforce coming from Oman. We have created a global export-focused company that will compete against the best and contribute significantly, we believe, to Oman's economy."

The move to develop one of the world's fastest growing packaging companies in the Sultanate responds to the global trend for convenience food packaging and the increasing use of clear rigid plastic for consumer products and merchandising. APET's clarity, gloss and toughness make it ideal for goods that require both protection and shelf impact, and the product is completely recyclable.

Octal entered the market with 20,000 metric tons of capacity and an additional 10,000 metric tons per year has come on stream this month. A new twin PET resin and APET sheet complex will provide a further 300,000 metric tons of APET sheet-making capacity from April 2008.

At that stage, Octal will be five times larger than the next producer of APET sheet and the largest PET manufacturer in the Middle East. It will represent nearly 20 per cent of the total industry output of APET sheet.

The first plant to go up in Salalah Free Zone, Octal's APET facility has a built-up area of 4,000 square metres, and that will grow to 135,000 square metres when the integrated PET resin and APET sheet complex comes on stream next year. Octal's investment will stand on a staggering 500,000 square-metre site, less than one kilometre away from the Port of Salalah.

Mohammed Hassan Al-Theeb, Deputy Chief Executive Officer of Salalah Free Zone Company, said: "Octal Holding is the first investor to set up a plant in Salalah Free Zone, and the company has committed to invest significant capital in its production facilities. This will lead to a substantial increase in non-oil exports from Oman and a rapid increase in activity at Salalah Port."

Al-Theeb added: "The project is expected to create substantial direct and indirect employment. Many Omani companies will benefit from tender awards and many ancillary and downstream businesses will also gain."

Octal already has 40 customers, mostly in the UK, the US and Western Europe, and is targeting expansion into Asia and the Far East. Octal's market position is further strengthened by its location next to Salalah Port, enabling delivery to most ports in the world within 12 to 18 days.

According to government reports, Oman's total non-oil exports to the United States stood at RO15.6 million in 2006. Through its operations and benefiting greatly from the recently signed FTA, Octal aims to increase that figure five-fold by the end of 2008, and the US will account for around half of Octal's output.

Octal's production breakthrough has been brought about by leveraging processes in downstream petrochemicals and the unique application of production principles learned from the paper and converting industry, where Managing Director Nicholas Barakat spent much of his career.

Barakat said: "Octal can tailor its product to a specific gauge, which saves money for our clients. When gauge is held to less than one per cent variation, manufacturers know exactly how much packaging will be produced per metric ton of APET sheet. There are other benefits, such as easier storage and higher shipping volumes. In the end, we just found a way to take an existing process and make it better."

He said: "Our manufacturing complex was designed to address the industry's cost and quality failures that are hampering the growth of APET. Octal is the first manufacturer to have fully integrated production from resin to sheet on one site, and to develop a base in Oman to compete worldwide."

Fluor Corporation, the world's largest publicly owned engineering, procurement, construction and maintenance services companies, is the technology advisor to Octal and the project manager.

Mag Fouad, Vice President of Process Technology at Fluor, said: "We have worked with Octal from its infancy and remain on the ground to complete the commissioning of facilities."