Fujairah is set to become one of the largest energy export hubs in the region due to fuel supplies from Abu Dhabi and its own locally generated oil exploration.
The emirate, which has long been dependent on its medium-scale tourism industry and shipping trade, is now heading for a diversified economy triggered by oil and gas exports through its ports with open access to the Indian Ocean.
One of the largest projects ready to transform Fujairah’s economy – and its commercial activities – is Abu Dhabi’s Habshan-Fujairah crude oil pipeline.
The 360km-long 48-inch-diameter pipeline, with an oil storage facility for eight million barrels per day (bpd) and an export terminal with four single-point moorings at Fujairah Port, is being constructed by Abu Dhabi’s International Petroleum Investment Company (Ipic) at an estimated cost of Dh36 billion. The pipeline will be completed in the next 12 months.
The project, known as Abu Dhabi Crude Oil Pipeline, will have a capacity of 1.5 million bpd. It will become the country’s largest overland oil pipeline and will span deserts and mountains to create safe passage for the “black gold” outside the choked Straits of Hormuz.
The Taweelah-Fujairah gas pipeline, which will supply the emirate with the Qatari gas through Abu Dhabi’s Dolphin Energy, will also boost the economy. Sources have told Emirates Business that Fujairah is likely to build an export terminal for the gas supplied from Taweelah. Senior Fujairah Government officials say the emirate, with its strategic location outside the Arabian Gulf, is going to witness a further economic and commercial boost fuelled by the regional oil and gas industry.
Additionally, it is an attractive port for major shipping lines, which do not have to pay a “hazard” premium on their insurance for using the Strait of Hormuz.
Dr Salem Abdo Khalil, technical advisor to the Government of Fujairah, said the emirate is not only going to become an international terminal for oil and gas exports, but also an hub for the whole hydrocarbon energy industry.
Dr Khalil said current activities – new refineries, expanded tanker-berthing facilities, oil and gas terminals, plus the emirate’s own hydrocarbon resource exploration – will lead the emirate to a position as an international centre for energy activities.
“Fujairah is already recognised as an international bunkering hub. Very soon we will have an internationally recognised tank-farm at the port,” he said.
“This will be the second move – a recognised international tank-farm centre with the current growing oil and gas storage facilities in the emirate,” he said, adding Fujairah Port was embarking upon a major project to increase shipping handling and exports.
“Four oil berths will be constructed to accommodate from four to eight vessels according to their sizes. This will be followed by the construction of four to five more berths for oil tankers.”
The third move, he said, was a crude oil export terminal, which is already under way with the construction of the crude oil pipeline from Abu Dhabi to Fujairah. This will make the emirate an oil exporting centre.
“The fourth phase of development is to become a major refinery centre. We already have a refinery and another announced by Abu Dhabi’s International Petroleum Investment Company. The site for the new Ipic refinery has already been allocated and the work will soon begin on it. To add to these, we are exploring hydrocarbon potential in the emirate,” Dr Khalil said.
“The crude pipeline, in addition to the emirate’s own oil exploration surveys and the fast-growing shipping industry, will completely change the face of Fujairah,” said Fujairah businessman Musa Barakat. “It will bring the emirate on par with emirates such as Sharjah, Dubai and Abu Dhabi. There will be an economic and commercial boom very soon.”
Economists and analysts also see Fujairah’s economy benefiting from its emergence as an energy export hub, not only for the UAE but also for the entire region.
One economist in Abu Dhabi, who spoke on condition of anonymity, said: “The entire Middle East region from North Africa to Iran is in turmoil. The region is the world’s largest producer of oil and gas, with about 20 per cent of the world’s supply flowing through the volatile Strait of Hormuz.
“Facing the Indian Ocean, exports from Fujairah will have easy access to markets like India and the Far East. Because of the vulnerable situation in the strait, particularly the tense situation caused by Iran’s nuclear programme, it has become very costly for oil exports.”
Oil exploration in 2008
Only 15 years ago, the emirate of Fujairah had very little infrastructure, a small market place and few commercial activities. However, economic growth can been seen in its skyline with the development of rows of high-rise buildings, homes and office blocks. To further fuel this growth, the Government of Fujairah has lauched a new off-shore oil exploration project.
From January 7 to March 10 next year, authorities will conduct a three-dimensional seismic survey of an off-shore zone to look for oil resources.
Authorities have signed a $20 million (Dh74m) agreement with two companies, including Naftogas of Ukraine, to survey the off-shore areas in search of new gas and oil sites.