Ripple effects: Infrastructure investments in ports are supporting the growth of maritime services and logistics

The Ras Laffan Industrial City and port were constructed through a partnership between Qatar’s state-owned gas firms and international energy companies to put in place the current liquefied natural gas (LNG) compression and export infrastructure. Today, Qatar has the world’s largest LNG tanker fleet and the largest LNG processing facility, enabling the state to export its gas resources throughout the world. The success of the facility and its positive effects for the overall economy have prompted efforts to repeat it. Ras Laffan facilitated energy exports, and the authorities have turned their attention to trade with the QR27bn ($7.4bn) New Port Project (NPP). The NPP is set to have an initial capacity of 2m twenty-foot equivalent units (TEUs), ramping up to 6m TEUs by the time it is completed in 2028. These ports boost trade and provide opportunities for new maritime-related segments. The construction of Ras Laffan, for example, has acted as a launch pad for businesses like shipbuilding and offshore services, and the NPP is set to bring opportunities in logistics and a new economic zone.

Portside Progress

As Ras Laffan’s processing capacity has allowed Qatar to top the list of global LNG producers, the Qatar Gas Transport Company (Nakilat) transports natural gas around the world. The joint-stock company heads a fleet of 62 wholly and jointly owned LNG and liquefied petroleum gas vessels. Nakilat’s LNG vessels have a combined capacity of more than 8.5m cu metres, representing 15% of global carrying capacity. Approximately half of the firm is owned by its founding shareholders and the other half is publicly held.

The summer of 2013 brought positive news for the company’s fleet expansion plans. In June 2013 Nakilat announced $917m of refinancing with Qatar National Bank. Nakilat also refinanced $1.33bn for its joint venture Maran Nakilat, a partnership between Nakilat and Greece-based gas shipping firm Maran Ventures, resulting in the addition of four new joint venture vessels, increasing Nakilat’s total LNG vessel count from 54 to 58. A larger fleet could mean more activity at Erhama bin Jaber Al Jalahma Shipyard in Ras Laffan, Nakilat’s shipyard facility completed in November 2010.

Expected Growth

Erhama bin Jaber Al Jalahma Shipyard hosts Nakilat’s joint ventures in ship repair and maintenance, and shipbuilding. Nakilat also offers towage and marine services via Nakilat-SvitzerWijsmuller (NSW), a joint venture created in September 2006. Owned 70% by Nakilat and 30% by Svitzer, part of the Denmark-based Maersk Group, NSW operates 30 vessels. Its main activities include towing, escorting and berthing, along with emergency response and general offshore marine support.

Repair and maintenance services are headed by Nakilat-Keppel Offshore & Marine (N-KOM). Established in 2007 as a joint venture with Singapore-based Keppel Offshore & Marine, the company maintains Nakilat’s LNG fleet and has secured contracts with other shipping companies. As for offshore, business has also been steady. “Looking at the present situation, there is definitely a lot of opportunities in the offshore market,” Abu Bakar Mohd Nor, the CEO of Nakilat-Keppel, told OBG.

In 2013 N-KOM celebrated the successful completion of 200 projects. The company also passed the 18,500 tonnes-mark for fabrication work completed since 2011. The gas transportation company’s shipbuilding venture, Nakilat Damen Shipyards Qatar (NDSQ), has also seen positive developments. Nakilat’s partnership with the Dutch shipbuilding group Damen Shipyards began in 2010 with the goal of producing steel, aluminium and fibre reinforced plastic ships in the state, focusing on ships up to 170 metres in length. In its first three years of existence, the company has made significant headway.

In September 2012 it completed its first project, a 140-metre barge for Qatar Petroleum. By the end of 2013, NDSQ had completed a total of 10 new-build workboats for use in Qatar. NDSQ also offers products for other marine segments, including the Coastguard and Navy. A contract concluded in March 2013 marked its first foray in the leisure market with a 69-metre luxury yacht. By the end of 2013, NDSQ had completed a total of seven repair, maintenance and refit projects on megayachts.

New Port Project

The joint enterprises at Erhama bin Jaber Al Jalahma Shipyard have seen impressive growth in the last four years, servicing Nakilat’s fleet and expanding into global markets. “Being part of Ras Laffan Industrial City, we have a significant role to play in the development of the maritime cluster in Qatar,” said Abu Bakar. Now the authorities are aiming to aiming replicate the success of the shipyard to capitalise on the NPP.

In 2011 the Ministry of Economy and Commerce founded Manateq with authorised capital of $5bn. Manateq has three economic clusters in the pipeline: Zone 1, a 4-sq-km area adjacent to Hamad International Airport; Zone 2, a 12-sq-km area next to the Doha Industrial Area; and Zone 3, a 33.5-sq-km area next to the NPP. The idea behind the economic zones is to encourage small and medium-sized enterprise (SMEs) growth by addressing two key challenges that the government says are holding back potential: access to prime locations and barriers due to complicated regulations currently in place. The current situation contributes to relatively high start-up costs for SMEs. By creating special economic zones with on-site services and nearby infrastructure, Manateq hopes to address the location challenge. As for regulation, the authorities plan to allow the economic zones to operate within a regulatory code that is simpler and separate from the laws prevailing in the rest of the country.

Zone 3, next to the NPP and Mesaieed Industrial City, is set to focus on logistics, as well as valueadded and downstream industries. With the presence of nearby Mesaieed’s factories and the new port set to come on-line in 2016, the authorities see the zone as a way to encourage new businesses that can create synergies with existing operations. Progress in the economic zones is well under way.

In other parts of the GCC, clustering economic zones around significant infrastructure investments has seen success. Dubai’s Jebel Ali Port, for example, was accompanied by a logistics free zone that grew into what is one of the largest shipping centres in the region. Bahrain built its Logistics Zone adjacent to Mina Salman Port, and Abu Dhabi is in the process of building up its Khalifa Industrial Zone next to Khalifa Port. In Qatar, similar portside investments were not immediately possible because of Doha Port’s crowded urban location. The construction of Ras Laffan created new opportunities for a cluster. The indicators are promising for Zone 3 and other enterprises built around the $7.4bn NPP.

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The Report: Qatar 2014

Transport chapter from The Report: Qatar 2014