Yard space shortage hits expansion plans of ship repair firms
There are 13 ship repair yards in the region with five dry docks, eight floating docks and 17 slipways.
Six new shipbuilding and repair yards are expected to be built in the Middle East and the west coast of India in four to five years, with additional docks being built at two existing yards.
But the region will remain short of yard space until the new facilities are completed.
"All the shipyards in the region, especially those in the UAE, are fully booked," said Eivind Grostad, Senior Vice-President and Regional Manager for ship classification agency DNV Maritime.
"The list of orders is growing and to accommodate demand, companies need more space. The types of work undertaken are also expanding. Dubai Dry Docks, for one, is now doing not only repairs but also conversions."
He said while there are some yards in Ajman, Ras Al Khaimah and Dubai Maritime City, the space they provide is not ideal for large-scale projects. "They have shipyard space but it's smaller. The kind of shipyard we need should be able to look after big oil tankers, gas and chemical carriers which come to the Gulf to load," he said, adding that a lack of dock space has resulted in about 200 tankers regularly lining up in Fujairah's waters to offload.
Currently, only the Arab Ship Repair Yard (Asry) in Bahrain and Dubai Drydocks World concentrate on very large vessels.
Asry, which is owned by the seven Organisation of Arab Petroleum (Oapec) countries – has been turning away its regular repair customers and has been reluctant to accept more orders, say sources.
Offshore construction companies are also feeling the squeeze. Sharjah-based and Oslo-listed Maritime Industrial Services (MIS) is finding it difficult to secure land for more yards. The company, which has yards in Sharjah, Saudi Arabia and Kuwait, is currently looking to expand its operations in other parts of the UAE.
"It's very hard to find space in any country in the Gulf," said MIS Managing Director Jerry Smith. "You may be able to go to the desert and develop a yard over there but the type of products we produce really needs to be fairly close to the seafront."
UAE-based Lamprell will this year spend $65 million (Dh240m) on expanding its Hamriyah yards, a move that will double the size of its land facility and triple its quayside dock space, enabling it to take on more drill and barge refurbishment work. "We actually don't have a problem with resources, our main challenge is the yard space," said Lamprell Executive Vice-President Colin Jones. "Capacity in fabrication yards is under pressure due to the amount of new oil and gas field developments."
With the space squeeze expected to continue for some years, Grostad said the most likely remedy was to set up yards in the East.
"A better solution is to look for space in the Indian Subcontinent rather than focus on finding it in this region," he said.
"Companies may not be able to own such a venture 100 per cent but they may be able to control it. Operations-wise, I don't think there should be a problem. Dubai Drydocks World, the shipbuilding arm of Dubai World, has been pioneering expansion in Asia.
Dubai Drydocks World Chief Executive Geoff Taylor said the company was looking at yards in China, India and Vietnam to expand capacity in the hot business of rig building as oil prices hit record levels.
The firm began moves to acquire sites abroad last year when it bought a controlling stake in Singapore shipbuilder Pan-United Marine. It later took over the city state's offshore oil rig builder Labroy Marine.