GCC to spend $15bn on ports
Gulf oil producers are expected to spend nearly $15 billion on the expansion of their ports within the next five years to meet growing business and the bulk of the investments will be in the UAE, according to a regional financial firm.
Many of the 35 major ports in the six-nation Gulf Cooperation Council (GCC) are undergoing expansion to handle a bigger capacity following an estimated eight per cent growth to nearly 25 million TEUs in 2010, the Kuwaiti-based Markaz financial centre said in a study on GCC sea ports.
The UAE ports have the highest share of volume in the GCC at 59% while some container ports in the region rank favorably among their global peers.
The report showed Dubai was ranked seventh in the world in 2009, handling 11.1 million TEUs. It moved down in rank to ninth in 2010 (mostly due to the growth of Chinese ports), nevertheless handling 11.6 million TEUs—a 4.5% increase. Salalah port in Oman ranked 32nd in 2010 with 3.5 million TEUs while the Saudi Jeddah port was 30th with an annual throughput of 3.8 million TEUs in 2010.
“There is a robust growth in investments on seaports to increase capacity. So far, the highest investments have come from Dubai and Abu Dhabi. The other GCC countries are also all set to improve their ports,” Markaz said.
“By compiling the list of seaport projects from Meed Projects, we arrive at a current total spending of $15 billion for the GCC. These projects are all due for completion within the five-year period from mid-2011 to mid-2016.”
A breakdown showed Abu Dhabi has the most ambitious project, valued at US$10 billion. It competes with Dubai, and this may create overcapacity.
Qatar has witnessed various delays but now shows the first signs of catch-up with its Phase I of the New Doha Port signed in March 2011, Markaz said.
Kuwait is progressing fast on its new Bubiyan Port project while Oman has started 2011 by consolidating on its past maritime success, it added.
“Dubai is the foremost GCC port by container volume and is ranked at the ninth place among the top 10 world container ports in 2010. Dubai had been ranked as high as seven in 2007 and 2009.”
According to the report, a shift in the direction and nature of trade is taking place between the GCC and the world.
It noted that about 30 years ago, the OECD accounted for 85% of the GCC’s trade while by 2009, the emerging markets accounted for 45%.
Its figures showed trade between the GCC and the emerging markets have been rising at 11 per cent annually between 1980 and 2009, whereas the annual growth with the OECD was only five per cent.
“The emergence of India and China has presented the GCC with substantial opportunities as hubs. Therefore, the GCC ports need to ramp-up capacity, not only to cater to their own increasing needs, but also to develop a hub strategy. Most of them are ideally placed as a trade platform between Asia and the Far East on one hand and the West, Central Europe, and Africa on the other,” it said.
“The GCC needs to greatly modernize and simplify its way of doing business especially in customs, immigration, and other businesses if it is to capitalize on this opportunity. Other forms of transportation upgrade are happening or being planned in air, roads, and railways. Seaports cannot lag behind.”
The report said it believes the favourable geographic location of the GCC countries provides them with a strong opportunity to establish one of the world's most important transport and logistics hubs not only along the Europe–Asia shipping lanes, but also for northern and central Africa.
It said the large volume of the GCC’s hydrocarbon exports by sea has ensured the development of ports in all member countries.
It noted that the GCC countries together have almost 38% of the world's reserves of crude oil and approximately 22% of global natural gas reserves.
“World trade was strongly affected by the crisis, showing a major dip in 2009 after a sustained period of growth in the past decade. As a percentage of world trade, the GCC represents about 3% of imports and 5% of exports,” it said.
Markaz cited a recent report by global analysts EC Harris which ranked the GCC as the most attractive region in the world for investment in port developments. Spurred by mega-projects such as Khalifa Industrial Zone, Abu Dhabi (KIZAD), and Oman’s Al Duqm, the survey assessed expected FDI growth and the ease of entering and doing business across a number of markets.
However, the report also quoted a lack in cross-border agreements between member states, adding that until a transport network is extended across the entire GCC, the region will not be able to fully capitalize on this investment.
“A clear example can be seen in Europe where the interconnected rail network has helped to open up lucrative trade routes for even the smaller member countries….there are 35 ports in the GCC, some of which are currently undergoing expansion to meet the increasing trade demands.”
Follow Emirates 24|7 on Google News.