Editor's Note: This is the second in an exclusive series of columns Chris Edmonds will be filing from a 10-day business trip through the Middle East.
OMAN -- Our visit to Oman on Tuesday provided a nice contrast to the frenetic lifestyle of the United Arab Emirates and Qatar.
This country of just over 3.2 million residents is about the same size as Kansas. Landing in the capitol of Muscat, you immediate recognize differences from the more commercial capitals of Abu Dhabi and Doha: the diversity of the topography where desert rises to majestic mountainous terrain that quickly falls backs to isolated coastline, a slower pace of life in both travel and commerce and an overall sense that life is more balanced in Oman.
What's most striking is that Oman is largely inhabited by nationals and that the workforce is nearly 80% Omanis. While the country has nearly 830,000 barrels of oil production per day (up from 750,000 last year), the country's economy also relies on light industry and tourism (tourism growth will be nearly 7% in 2007) for growth and stability. And, more so than other countries visited so far, the country seems to almost downplay its oil-and-gas industry in an attempt to portray a more balanced economy.
We spent the afternoon with a number of Omani business and government leaders that work to promote international business and investment opportunities in Oman. Again, however, unlike the U.A.E. and other burgeoning economies that appear more interested in foreign spending on real estate, Oman appears more interested in new business formation and expansion from foreign companies to bring the potential for wealth creation and jobs to the country.
While Oman doesn't have the glitz and glamour of Dubai, it does offer what many may think is a more balanced lifestyle and government stability that puts it at the top of the Gulf Cooperation Counsel (GCC) countries. Moreover, the country is focused on developing a native workforce that can provide basic industry with a qualified labor pool.
Potentially the largest advantage Oman can offer is its location. While still a Gulf nation, it sits outside the Strait of Hormuz, not only reducing some shipping uncertainty given the instability in the Gulf region but also putting Omani ports closer to main shipping lanes.
Because of its relative lack of development, it is many times overshadowed by ports such as Dubai. However, the Omani people are working hard to develop a reputation as a stable and less frenzied alternative to the U.A.E. and Qatar, and it seems to be working.
This very interesting bit of data came from our meetings in Oman: Nearly 55% of the Omani populace is under 21 years of age. With the birth rate continuing to increase in Oman -- and in many other GCC nations -- the challenges for the educational infrastructure are clear.
However, the workforce implications are even more important. At the same time that Western workforce pools area graying, Middle Eastern and Asian pools are becoming larger and more eager. We met with a group of more than 30 young business leaders in Dubai on Tuesday night. The average age of the group was under 30, and all were developing and leading business initiatives in Dubai and in other major cities of the Middle East.
The common theme among them all was a sense of spirit, determination and interest in creating leading, international businesses. On Monday, I wrote about why the Gulf countries could well be on their way to creating the next global financial center. A young, eager and educated (certainly a key that isn't necessarily apparent in all Gulf countries) leadership will go a long way to pushing toward that goal.
As the need for additional hydrocarbons continues to grow and the depletion rate of existing fields accelerated, the need to find new hydrocarbon reservoirs will increase. And once they are found, there will be a growing need to move that oil from field to market. That movement will be facilitated by an rapid increase in pipeline development in the region.
One company to watch is Willbros
(WG)
. Willbros' current Middle Eastern operation is based in Oman, where the company provides new pipeline development, as well as maintenance services for Oman LNG. While this is a small part of Willbros current business, it appears ripe to grow in the coming years.
Not only does Willbros have a long-standing relationship with key Omani players (working in Oman as The Oman Construction Company), it has developed key expertise in Middle Eastern pipeline work. With growing need for pipeline contractors and product in places like Saudi Arabia, Qatar and elsewhere, look for TOCO to become a more important platform for Willbros growth in the coming years.
Combined with Willbros core U.S. pipeline business, TOCO could be a surprisingly positive kick to the company's business.
Coming tomorrow: Visits in Bahrain with regional experts, geopolitical pundits and former Saudi Aramco executives. Plus, coming later, more on Iran, Iraq and what it means to be an American living in the Middle East.
At time of publication, Edmonds had no positions in stocks mentioned, although holdings can change at any time.
Christopher Edmonds is managing principal at Energy Research & Capital Partners, an energy investment firm and an affiliate of FIG Partners. He is based in Atlanta. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.
