Upstream operator Petroleum Development Oman (PDO) has signed a five-year $1.2bn deal with Japanese company Nippon Steel & Sumitomo Metal to supply piping for drilling operations from Duqm.

The deal includes a new supply yard in the Duqm Economic Zone, which will function as a logistics centre for materials delivered to PDO’s drilling locations, PDO said in a statement.

The agreement will confirm PDO as the lead tenant at Duqm from mid-2018, with up to two shipments of 3,000 metric tonnes of piping each, being routed form the port to the operator’s oil and gas fields.

Around 30 trucks will be needed to transfer pipes from the new supply yard to PDO locations, with the logistics hub set to provide integrated supply chain management services such as storage, planning and delivery.

The sultanate is developing the special economic zone at Duqm, which includes a refinery, port, airport and other facilities as part of its efforts to diversify its economy away from oil.