US embassy cable - 05MUSCAT298

UNCLAS E F T O SECTION 01 OF 02 MUSCAT 000298 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/CBA, NEA/ARPI 
STATE PLEASE PASS USTR/JBUNTIN AND JFENNERTY 
USDOC FOR 4520/ITA/MAC/AMESA/OME/MTALAAT 
USDOC ALSO FOR ADVOCACY CENTER/CJAMES 
 
E.O. 12958: DECL: 02/20/2010 
TAGS: BEXP, EINV, EIND, EMIN, ELAB, MU, Economic Affairs 
SUBJECT: BECHTEL SNAGS BILLION DOLLAR PROJECT IN OMAN 
 
REF: A. MUSCAT 242 
     B. 04 MUSCAT 555 
 
Classified By: Ambassador Richard L. Baltimore III. 
Reasons: 1.4 (b) and (d). 
 
This message contains business sensitive information not yet 
released to the public.  Please handle accordingly. 
 
1. (SBU) Summary: Bechtel's Regional Manager has informed the 
Ambassador that Bechtel won the construction contract for a 
large aluminum smelter in the city of Sohar.  This $1.3 
billion project, scheduled to be completed by 2008, will 
eventually employ around 2000 people and marks another 
milestone in new American investment in the Sultanate.  End 
Summary. 
 
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Advocacy and Success 
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2. (SBU) Bechtel Regional Manager for Saudi Arabia and the 
Gulf David Robinson called on the Ambassador on February 16 
to deliver a copy of Sohar Aluminum Company's letter of 
intent naming Bechtel as its preferred EPCM (Engineering, 
Procurement, Construction, and Management) contractor.  This 
success marks the culmination of a tendering process that 
began nearly a year ago (ref B).  By 2008, Bechtel will 
construct a state-of-the-art aluminum smelter in the port 
city of Sohar in northern Oman, which is quickly becoming a 
hub of industrialization.  The project is valued at roughly 
$1.3 billion.  Sohar Aluminum Company is a joint venture 
between Oman Oil Company (40 percent shareholding), the Abu 
Dhabi Water and Electricity Authority (ADWEA, 40 percent), 
and Alcan (20 percent). Robinson repeatedly expressed his 
appreciation to the Embassy and the Department of Commerce 
for sustained advocacy support (ref A).  Given that Bechtel's 
competition (SNC Lavalin) was Canadian along with one of the 
major shareholders in the project (Alcan), advocacy played an 
important role in Bechtel's ultimate success.  (Note: 
Bechtel's award has not been made public to date, and the 
company is waiting for the local partners to make the 
announcement before releasing any information.  End Note.) 
 
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Jobs and Omanization 
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3. (SBU) Bechtel will construct the Sohar facility along the 
same lines as its ALBA facility in Bahrain, which is in the 
final stages of completion.  Many of the managerial and 
technical personnel who worked on ALBA are likely to transfer 
to Oman in the coming weeks and months.  As many as 6000 
workers were on-site in Bahrain at the height of 
construction; Robinson claims that a similar number will be 
employed during construction in Sohar.  Once operational, the 
plant will employ close to 2000 workers.  Bechtel has 
developed an aggressive Omanization program to ensure that a 
vast majority of these jobs are held by Omanis. In 
conjunction with local partner Bahwan Engineering Company, 
Bechtel is designing an extensive training course for its 
workforce.  Moreover, worldwide studies of aluminum smelters 
show that the secondary employment effects are substantial, 
with 10 indirect or "downstream" jobs created for every 
direct hire.  Given Oman's need for employment, this 
development would be welcomed by the Sultanate, although it 
is unclear whether these downstream jobs will remain in Oman 
or be exported elsewhere. 
 
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Expanding the American Community 
-------------------------------- 
 
4. (SBU) While Robinson does not foresee a massive influx of 
Americans, he does anticipate that as many as 100-150 
Americans from Bechtel will come to Oman during the 
construction of the smelter.  The Ambassador made a strong 
pitch for The American International School of Muscat, and 
Econoff urged Robinson to become a member of the Muscat 
American Business Council.  Other expatriate workers for 
Bechtel will come from India, the Philippines, Australia, and 
Britain. 
 
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Comment 
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5. (SBU) With Dow Chemical already establishing a major 
presence in Oman, the victory by Bechtel is evidence of 
increasing momentum for U.S. companies in the Sultanate.  As 
we open free trade agreement talks in March, Oman's welcoming 
attitude toward American investment should provide fertile 
ground for concluding a strong accord.  We also hope that the 
positive experiences of Dow and Bechtel will encourage other 
American firms to enter or expand into Oman in support of our 
MPP goal of increased trade and investment. 
BALTIMORE