Port Plans

Text size +-
The main port of the northern emirate of Fujairah is to undergo a major upgrade, bolstering its importance to the economy of the United Arab Emirates (UAE) and the region.

On August 9, port authorities announced they had secured a $245m loan to fund an expansion of existing facilities and the construction of new facilities. It was the first time that the state-owned firm that owns the emirate's shipping hub, the Port of Fujairah (POF), had ventured into the open money market, having funded previous expansions through internal cash generation.

POF Chairman Sheikh Saleh bin Mohammed Al Sharqi said that the loan, organised through the National Bank of Fujairah and the Commercial Bank of Dubai, had been heavily oversubscribed. This was a testimony to the strength of the company and the future of the port, he said.

"We have clearly defined our expansion plans and their objectives, which will benefit not only the port but also the commercial support services in Fujairah and the rest of the UAE," Al Sharqi told the local press.

The loan will assist the POF in realising its growth objectives, according to Captain Mousa Morad, the port's general manager,

"The proceeds of this facility will be utilised by the port for a major infrastructure expansion, which will benefit the emirate for many years to come," he told local media. "Banks recognise the intrinsic merits of the expansion plan and the benefits that will flow from it."

Though the exact details of the port expansion were not made public, it is speculated that the loan might be used to upgrade the port's container services. Currently, the port's container terminal is not being used to full capacity, and Dubai Ports World - the company that leases the quay and cranes - has expressed a wish for the port to be able to handle more containers and unload larger vessels, according to the local press.

The port could take on added economic and strategic importance if a proposal by Dubai authorities is passed to build a $200bn canal that would bypass the Strait of Hormuz. The plan, floated in early September, would link the Arabian Gulf with the Gulf of Oman at Fujairah.

Not only would the canal ease the congestion in the Strait of Hormuz and reduce the potential threat to international oil supplies in the event of war, it would greatly increase economic activity at Fujairah and its port.

More concrete than the canal proposal is the pipeline that Abu Dhabi is building to connect the Habshan oilfields to Fujairah. The 360-kilometre link is due to begin transporting oil in 2010, and will have a capacity of 1.5m barrels per day. Though the pipeline will reduce tanker traffic in the Strait of Hormuz by less than 10%, it will result in a massive increase in activity at the port of Fujairah.

Since commencing operations in 1984, Fujairah has developed into one of the world's largest bunkering centres, ranked alongside Rotterdam and Singapore as a major global refuelling port. Over the years it has undergone a number of expansions, significantly in 2002 when the port's basin was expanded to a depth of 15 metres to allow larger vessels to berth and the main quay extended by 600 metres, along with storage area added for containers. In 2005, an additional 720 metres of tanker berths were built in response to the port's increasing importance as a bunkering and oil loading facility. The port currently has an annual bunkering volume of around 12m tonnes, a capacity set to increase in the coming years.

In March, marine fuel products supplier Chemoil announced plans to further expand its storage facilities at the port by as much as 600,000 cubic metres (cbm) by 2010. Currently, the company has 109,000 cbm of storage capacity at Fujairah, of which 60,000 is leased from another firm, Vopak.

One of the main advantages Fujairah enjoys as a bunkering and oil loading port is its location, 130 kilometres to the south of the entrance to the Strait of Hormuz. This allows large numbers of vessels to anchor safely off the port while waiting to pass through the strait to take on fuel, rather than adding to the congestion within the waters of the Arabian Gulf.

Nevertheless, Fujairah is facing increased competition from other ports along the eastern Arabian coast. In particular, the Omani ports of Salalah and Duqm on the Arabian Sea and Sohar, down the coast from Fujairah on the Gulf of Oman, have seen massive expansions in recent years.

Despite this, Fujairah has established itself as the premier bunkering port in the region, a position it is likely to retain and reinforce in the years to come.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In UAE: Ajman

Which sectors stand to benefit from a UK-GCC trade deal?

As part of plans to expand and diversify its global trade partners, the GCC has launched negotiations with the UK on a free trade agreement that is expected to bolster the bloc’s economy, help...


Emerging markets lead uptake of cryptocurrency despite bear market

Despite global financial headwinds and significant declines in the value of cryptocurrencies this year, emerging markets are adopting the technology at a rapid pace.