The past decade represents an extraordinary period of economic growth for the Gulf countries and the UAE in particular. The UAE, the Arab world's second-largest economy, has enjoyed seven consecutive years of growth in excess of 2.5 per cent and doubled its economy in a decade. But – as with all nations that have exhibited such phenomenal growth – we are now confronted with a period of reflection and consolidation.
The UAE enters such a period in parallel with the continued and rapid development of its economy. This is an entirely healthy state of affairs and there is much to be proud of. However, it occurs at precisely the same time as one of the most significant downturns in the global economy. So there are challenges that must be addressed.
The inference of "boom and bust" is that they are separate events to be managed in sequence. However, in the case of the UAE, it appears they need to be managed in parallel! There are also, in my belief, three sectors which represent specific challenges for not only the UAE but the region in general: aviation, power generation and oil and gas.
It is no secret that the region's airspace is congested and that this problem will be exacerbated by the construction of new airports, the growing number of air movements in the Gulf region and Asia and dated technical systems.
There are commercial and environmental consequences in this challenge. For example, planes entering congested airspace must frequently circle in defined "holding patterns" for lengthy periods of time waiting for landing slots.
An Airbus 330 – in a typical landing configuration – burns in the region of 5,000kg per hour of aviation fuel. So having to hold for any significant period of time introduces added cost to a flight, not to mention the impact on the environment. In 2007, Lufthansa estimated their fleet spent 9,415 hours in holding patterns burning about 33,200 tonnes of aviation fuel. This figure did not include the estimated 30,000 tonnes of fuel burnt to make up for the delays induced by having had to hold in the first instance.
There is, therefore, an urgent need for UAE authorities to engage in detailed strategic planning with all stakeholders if the region's ambitions are to be fully realised. The drivers of congested airspace extend beyond the UAE's borders so collaboration on a global scale is a prerequisite for the UAE becoming the international hub it justifiably aspires to be.
The UAE government's plans to evaluate civil nuclear power as a viable option to meet anticipated needs are set out in their excellent white paper, "Policy of the United Arab Emirates on the Evaluation and Potential Development of Peaceful Nuclear Energy."
The policy is built on six pillars that include a commitment to "…the highest standards of safety and security…" and to approaching their "….peaceful domestic nuclear power programme in a manner that best ensures long-term sustainability."
This is deeply encouraging. But it is worth stressing the key role that the nuclear regulator will need to play if the otherwise excellent aspirations are to be met. The challenge will be exacerbated by the stated intention to draw on more than one global civil nuclear power to provide solutions. Key issues will include the extent to which designs meet the safety requirements and ensuring construction will be implemented in accordance with the design requirements. Further, the nuclear regulator will also need to ensure that proper emergency planning arrangements are in place and - crucially – tested.
The volatility in oil prices and its impact on the UAE's oil and gas industry highlights another challenge: the central role that asset integrity management must play in the development of effective strategies to deal with the current economic downturn.
Asset integrity management embraces many aspects of plant operations from maintenance planning, corrosion management and inspection regimes to safety management and safety assurance.
Recently, we at ESR Technology have noted a high demand for our asset integrity services. To put the issue in context in the Gulf, there are around 1,000 projects to extend the life of existing oil, gas and petrochemical plant and facilities worth a massive combined total of nearly $950 billion (Dh3.49 trillion).
More recently we have noted a tendency for some companies to delay, slow down or, in a few cases, cancel existing projects to address short term financial needs. We believe this is a trend across the industry and while understanding what is driving the need for such measures, we strongly suggest that such measures are at best false economies. Doing less or nothing at all, with assets that are deteriorating, is not a strategy for success and will lead to failure, loss of production, and in some cases – to loss of life.
This is a fascinating juncture in the continued and rapid growth of the UAE economy. The region has demonstrated its intent through solid delivery on what it has said it will do. The challenge now is to reflect on what has been achieved to ensure that progress is both durable and sustainable by facing up urgently to the challenges that rapid growth presents.
- The author is CEO of ESR Technology, an engineering, safety and risk management consultancy with operations in the UK and the UAE