With a host of natural advantages, the region will be key to broader diversification efforts

Home to one of the world’s largest oil industries, Al Gharbia is a driving force in the country’s wider push for economic diversification, with the oil and gas industries and tourism sectors at the forefront. The region’s GDP and population are expected to almost double by 2030, and the regional government is working to attract investors to participate in its development.

Vital Statistics

Al Gharbia covers an area of 60,000 sq km, accounting for 71% of the emirate’s total land area. The region has a coastline of 350 km.

Al Gharbia’s population was 225,700 as of 2010, the last year in which a census was carried out, or around 9% of the emirate’s total, and is expanding rapidly. According to estimates from the Statistics Centre - Abu Dhabi, the region’s population had reached 301,400 as of mid-year 2013. The region has seven main towns: Madinat Zayed, the administrative capital; Liwa; Ghayathi; Ruwais; Mirfa; Sila; and Delma Island.

Ruwais is one of the country’s most important industrial centres, while Liwa is located in the large oasis area of the same name and is becoming an increasingly important tourism destination.

The lion’s share of the country’s oil reserves are in Al Gharbia – some 90% of Abu Dhabi’s reserves, which in turn account for 90% of the UAE’s total reserves – and hydrocarbons are the main driver of the region’s economy. According to the Al Gharbia Investment Roadmap, published in 2012 by the Western Region Development Council, the region’s GDP is projected to double between 2010 and 2030, from Dh243bn ($66.1bn) to Dh500bn ($136.1bn).

The increase in GDP will be driven by sectors such as oil and gas, contributing Dh120bn ($32.7bn), power generation (Dh62bn, $16.9bn), infrastructure and transport (Dh54bn, $14.7bn), and tourism (Dh4bn, $1.1bn). Major investments include a nuclear power plant, the expansion of one of the world’s biggest oil refineries and the world’s largest sour gas project.

Local Administration

Al Gharbia is administered by the Western Region Municipality (WRM), which was established in 2006, following local government reforms in 2004. The WRM works under the umbrella of the Department of Municipal Affairs and is made up of 16 members who represent the region’s seven main settlements and are appointed by the Abu Dhabi Executive Council. The administration consists of bodies responsible for overseeing strategic planning, town planning and licensing, municipal infrastructure, support services and area services.

The government has a number of specific goals. These include supporting small and medium-sized enterprises, increasing participation in the knowledge economy, enhancing product and concept offerings to promote business development, and marketing Al Gharbia as an affordable destination for both families and cultural tourists.

Sheikh Hamdan bin Zayed Al Nahyan is the ruler’s representative for Al Gharbia, appointed by his brother, Sheikh Khalifa bin Zayed Al Nahyan, president of the UAE and ruler of Abu Dhabi, to oversee the Western Region, and works in tandem with both the WRM and the government. Sheikh Hamdan has a diwan (a cabinet of advisers) and an undersecretary who handles the administration, including protocol, support services and citizens’ affairs.

“Plan Al Gharbia 2030 represents the translation of His Highness’s vision for regional development and provides a framework for the successful implementation of initiatives that will drive the development of Al Gharbia,” Mohammed Ebrahim Al Hosani, regional development director at the Abu Dhabi Department of Economic Development (ADDED), told OBG.

The government has identified sectors with particular potential for investors in Al Gharbia, namely energy, chemicals and petrochemicals, water equipment and technology, tourism and food. Each has the ability to leverage the region’s competitive advantages in terms of resources, geography and development needs.

Centres Of Opportunity

Al Gharbia’s seven main settlements are spread across the region, from Delma offshore to Liwa inland to the south. Each has competitive advantages for the development of specific sectors, which the government has identified and seeks to promote. Moreover, all the towns are expected to see strong population growth over the next decade and a half, with the number of residents more than tripling in some cases.

The administrative capital, Madinat Zayed, lies to the east of the region’s centre, 160 km from Abu Dhabi City. Its population is expected to expand at a compound average growth rate (CAGR) of 2.9% between 2010 and 2030, to 61,000 people.

Madinat Zayed is seeing an influx of investment within the real estate and construction sector in particular. The government has identified that there is a need for more residential and retail space, and investment in health, education and social services to support the growing population. Its role as the region’s administrative centre attracts business travellers, while leisure tourists, both domestic and foreign, tend to visit for cultural events, boosting demand for tourism property, infrastructure and services.

Ruwais is the region’s second-largest town and is expected to be its largest by 2030, at 130,000 people, following a rise of 350% in its population over the past two decades. Ruwais lies 200 km west of Abu Dhabi City in the centre of Al Gharbia’s Gulf coast.

The city is at the heart of the UAE’s oil and gas industry, and is home to an increasing number of industries, including many that use the region’s hydrocarbons as feedstock. The government has also identified opportunities for investing in real estate and services as the city expands. Ruwais is also the western terminus of the 264-km-long first phase of the Etihad Rail project. Much of the $11bn national rail network that the UAE is developing will go through Al Gharbia. Etihad Rail will link with new rail systems across the Gulf and, it is hoped, eventually on to Turkey, Europe and Central Asia. It could therefore become an important catalyst for industrial development.

Liwa is the region’s third-biggest town, and is expected to see its population grow at a CAGR of 4.7% between 2010 and 2030, reaching 65,000 people and thus overtaking Madinat Zayed in size. Liwa’s location on the northern edge of the Empty Quarter, one of the world’s most famous deserts, and amidst oases, makes it ideal for tourism. It is also home to date plantations and camel farms: the former can feed into value-added industries using dates in confectionery, while the latter can help boost the UAE’s self-sufficiency in food.

Mirfa, which is situated 120 km to the west of Abu Dhabi City on the coast, is expected to grow at a CAGR of 7% to reach a population of 75,000 by 2030. The city’s strategic location as the gateway to Al Gharbia and the major town closest to the capital is likely to make it a locus for investment, catalysed by the development of Al Gharbia’s biggest port. Industry, logistics, residential and commercial real estate, and tourism are all seen as sectors of particular potential.

Ghayathi lies in the west of the region, inland and about 230 km from Abu Dhabi City. Its population is expected to grow by 50% to 2030, reaching 21,000, as it leverages its position near the heart of the emirate’s oil and gas sector. The government expects particularly strong demand for residential real estate.

“New initiatives include the Ghayathi-Ruwais Light Industrial Zone, which creates the opportunity for companies to have a long-term presence in the region,” Al Hosani told OBG. “Commercial benefits include reductions in logistical costs and associated timescale delays, while helping companies to ensure high-quality services to the oil and gas and the real estate development sectors. This will provide improved investment opportunities for local investors.”

Further west is Sila, near the Saudi Arabian border, and the western gateway to the region, as well as a transit point for trade bound for the kingdom, the Gulf’s biggest market, making transport and logistics important sectors. Sila is also the nearest major settlement to Abu Dhabi’s $20bn Barakah nuclear power plant, currently under construction, so its strategic and commercial importance looks set to increase in the coming years. The government has identified retailing and community services as two segments with particular potential, in addition to tourism and hospitality, fuelled by travellers taking short breaks from neighbouring countries. The growth spurt is expected to take the population to 17,500 by 2030, which is almost twice the level two decades before.

Off the coast lie Delma and Sir Bani Yas, two of the most promising tourism destinations in the Gulf. Investment in hotels, leisure facilities and retailing outlets will be needed to cater to new visitors, as well as the growing local population. Sir Bani Yas has led the way in the development of island tourism in the emirate, particularly with the eco-friendly Al Sahel Villa Resort, which opened in January 2014 and is managed by Thailand-based Anantara Resorts.

There is potential for similar projects as the island could be developed as a winter tourism destination, capitalising on its warm weather while much of the northern hemisphere is cold.

Energy Sector

As the dominant sector in Al Gharbia’s economy, energy has been a natural magnet for investment over the past few decades. The oil and gas industry alone accounts for 90% of the region’s GDP, and Al Gharbia is home to the UAE’s largest onshore oil and gas fields, which are expected to attract further investment worth tens of billions of dollars over the next decade. Despite the industry’s success to date, the sector is still some way from realising its full potential. Investments in upstream exploration, coupled with increased opportunities for service and equipment providers, will see the region’s oil and gas sector continue to expand.

In addition to its oil wealth, Al Gharbia is also home to the world’s largest sour gas project – the $10bn development of the Shah field by the Abu Dhabi Gas Development Company (Al Hosn Gas), a joint venture between Abu Dhabi National Oil Company (ADNOC, 60%) and Occidental Petroleum (Oxy, 40%). Al Hosn Gas commenced initial production in early January 2015 and intends to extract 1bn cu ft (bcf) of gas per day from the field, with 500m cu ft of sales gas.

The project will have a substantial impact on the UAE’s gas supply, helping support rapidly rising demand from the power generation sector and industry, especially petrochemicals. The Shah field is a challenging prospect for development – which is why it has lain untouched for decades. The gas is particularly sour, with a hydrogen sulphide content of 23% and a carbon dioxide content of 9%, requiring complex and expensive health and safety procedures to complete the difficult technical process of extraction. Despite these obstacles, the local demand for gas is such that the project is seen as not merely worthwhile, but necessary.

The region’s energy potential does not end with hydrocarbons. Al Gharbia will be home to the UAE’s first nuclear power plant, while the world’s biggest concentrated solar power plant also opened here in 2013. The region’s year-round intense sunlight, long coastline and swathes of open land make it ideal for developments like these, and Al Gharbia is likely to be at the forefront of renewable development in the region going forward. The nuclear power station is taking shape at Barakah, a sparsely populated area 50 km from Ruwais and 240 km from Abu Dhabi City. The state-run Emirates Nuclear Energy Corporation owns the plant, while Korea Electric Power Corporation is responsible for its delivery. The plant will have four reactors, each with an installed capacity of 1400 MW.

The first unit is expected to come on-line in 2017, and the completed plant should be fully up and running by 2020, providing more than 25% of the emirate’s peak demand electricity requirements.

Meanwhile, the 100-MW Shams concentrated solar plant was launched by Masdar, a subsidiary of government-owned investment firm Mubadala Development Company dedicated to renewable energy, in March 2013. Located 6 km outside Madinat Zayed on a 2. 5-sq-km plot, the Dh2.2bn ($598.84m) power station is expected to be the first of several large-scale solar plants in Al Gharbia. “The launch of the Shams 1 solar park is a significant landmark in Abu Dhabi’s commitment to achieving sustainable economic development. Investing in nuclear and renewable energy will enable the emirate to meet its high electricity needs using alternative means,” Mohamed Hamad bin Azzan Al Mazrouei, undersecretary of the Court of the Ruler’s Representative in the Western Region, told OBG.

Chemicals

If its hydrocarbons resources have brought Al Gharbia most of its wealth and prominence over the past decades, the use of those resources in value-added industries is expected to play an increasingly important role in driving the economy in the future. For the government, the development of a chemicals manufacturing hub in Al Gharbia represents the largest potential contributor to the growth of the region’s GDP. The region aims to develop all steps of the value chain of complex chemical manufacture, including midstream facilities producing basic plastics and polymers, as well as far-downstream converter plants producing finished goods such as plastic films, pipes and bags (see Industry chapter).

Al Gharbia is already home to the largest petrochemicals complex in the UAE at Ruwais. This will soon be one of the world’s largest integrated polyolefin complexes, after a third plant opens at the facility owned by Borouge, a joint venture between ADNOC and Borealis, a European petrochemicals company based in Austria and partially owned by the International Petroleum Investment Company. Once Borouge 3 is fully operational, the complex will have a total annual production capacity of 2.6m tonnes of polyethylene and 1.8m tonnes of polypropylene. The main contractors on the expansion include Linde Group, Hyundai, Samsung and Tecnimont.

Water Equipment & Technology

Plans for further industrial and urban development in Al Gharbia, with some cities tripling in population over the coming decade and a half, have contributed to concerns over water provision. While the region also has large groundwater reserves, which can help alleviate pressure on supply across the country and potentially beyond, the issue remains acute.

The government aims to develop an industrial cluster of businesses specialising in the development and manufacture of technology and equipment to produce, monitor and conserve the use of fresh water. This could include desalination technology, water pumps and smart meters, potentially making Al Gharbia a model of water management for the entire region.

Environment

On the green front, in addition to the drive to develop solar capacity in the region, efforts are also under way to preserve the environment, reduce carbon dioxide emissions and increase the availability of green space, especially in urban areas. For example, under the Al Gharbia Development Programme, the WRM intends to build a total of 42 parks across the region’s major cities, including 14 in Madinat Zayed, 10 in Sila, seven in Ghayathi, five in Liwa, four in Mirfa and two in Dalma. In addition, the municipality has plans to build an 18,000-sq-metre educational and learning garden, as well as a series of 10 modern parks built adjacent to one another with a total space of 100,000 sq metres. In Liwa, a 150,000-sq-metre park is also in the works, along with associated recreational and entertainment facilities.

Food

Al Gharbia is already home to some of the UAE’s largest and most productive farms, and agriculture is the main employer, contributing to both economic and social development. The region has traditionally been a centre for camel herding and date production in particular, with the area around Liwa specialising in both. Better application of modern technology, a degree of consolidation, and improved marketing and distribution would help to improve both productivity and sustainability, while at the same time opening up new markets for traditional farmers.

Moreover, the government sees some potential for development in aquaculture and crop production using hydroponics (the cultivation of crops using nutrient solutions rather than soil), capitalising on Al Gharbia’s tradition of agriculture, as well as its strong sunlight, to improve the UAE’s food security.

Dovetailing with both support for traditional agriculture and the development of newer activities in the sector are plans to enhance value added by producing more packaged and processed foods and other products from primary agricultural produce in a variety of areas, ranging from cosmetics to juices.

Real Estate

The anticipated increase in the emirate’s population, and the needs of growing businesses in the region – both local and international – have led to rising demand for real estate.

The region’s population is expected to double between 2010 and 2030, and developers are already moving in to ensure that there is enough property available for residents and investors.

In 2014, the first phase of the Al Hai Al Tejari mixed-use development opened in Madinat Zayed, with a total land area of 22,905 sq metres, 120 residential units and 4500 sq metres of retail space, as well as offices. The retail anchor is a supermarket called Souq Planet, which is equipped with self-scanning checkouts, a first in the UAE. “This project now provides Madinat Zayed with an extremely attractive destination, through the adoption of leading-edge technology and the provision of integrated and high-quality community facilities,” ADDED’s Al Hosani told OBG. “Al Hai Al Tejari provides a strong potential investment opportunity for local partners in the project through the special purpose vehicle that was set up in order to encourage local participation in the scheme.”

Asma Al Kindi, project manager for Al Hai Al Tejari at ADDED, told OBG that the success of the initial phase would see phase two implemented considerably more quickly than had been anticipated, and that he was seeking more local partners to join the project.

Construction work is currently under way on the Wajeha Al Bahria mixed-use complex located at Mirfa. The project has a total gross floor area of 26,935 sq metres on a plot of 39,307 sq metres, and includes 5000 sq metres of retail space, 126 apartments as well as 10 beachfront villas.

The development aims to take advantage of Mirfa’s attractive coastline, and according to Al Hosani of ADDED, has seen “unprecedented demand”, with all units already sold during the planning stage of the project. Following this success, the second stage of the project was in planning as of late 2014.

Wajeha Al Bahria is a “ready-to-go investment package”, with pre-approved development guidelines and basic infrastructure already in place. This makes investment decisions and processes more straightforward for the investor, as well as ensuring that any further developments will be in keeping with the broader strategy of Plan Al Gharbia 2030. ADDED intends to continue using this model in the future.

Wajeha Al Bahria was developed in response to increasing demand for property driven by major investments in Al Gharbia as a whole, which have strengthened the city’s strategic importance as a gateway to the western region. “The city development projects are responding to the economic development of Mirfa, including mega-projects such as the new power station and Etihad Rail,” Yasser Al Khajah, CEO of the National Transport and Contracting Company, the developer of the project, told OBG.

Outlook

Al Gharbia’s resource wealth has been a primary factor in the UAE’s rise to global prominence over the past few decades. Continuing development of oil reserves, as well as the sizeable investments in sour gas taking place at Shah, will see hydrocarbons remain central to the wealth of the region and the emirate as a whole. However, it is also helping to drive the development of other sectors, including petrochemicals, electricity, logistics and manufacturing.

In addition to its abundant feedstock, Al Gharbia can leverage its location, strong infrastructure that will soon include a railway and favourable business environment, which benefits from both government support and attractive tailored investment packages.

Nevertheless, the region must compete with other parts of the Gulf and beyond that are also setting themselves up as diversified economic centres, necessitating a continued focus on enhancing the region’s existing competitive advantages.

Despite these challenges, Abu Dhabi’s proven ability both to plan and successfully execute large-scale projects bodes well for the future of Al Gharbia.

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The Report: Abu Dhabi 2015

Al Gharbia chapter from The Report: Abu Dhabi 2015

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