The investment currently underway in Dubai and its surrounds has to be seen to be believed. At one stage, 20 per cent of the world’s construction cranes and 80 per cent of the world’s dredging fleet were in operation in and around the Dubai/Jebel Ali/Sharjah areas of the UAE.
In Dubai, the local rulers have been quick to realise that UAE oil will run out in around 15 years’ time, and as a result have invested in tourism and the service industries, such as maritime, communications, air transport and finance. In the maritime field, the legal and finance regimes are fast gearing up to serve the many shipowners, operators and managers, plus other companies moving into the area, both local and international.
DNV’s local manager and senior vice president Eivind Grøstad described the attraction of Dubai as having very good infrastructure, banking, communications and air transport. He said the local regulators had taken Singapore as a model to build up their business portfolio.
Many shipowners and managers have moved into Dubai recently, including Vela, United Arab Shipping Corp (UASC), National Shipping Corporation of Saudi Arabia (NSCSA) and its management offshoot Mideast Shipmanagement, plus Ocean Bulk Shipping, which is part of
the Indian migration to Dubai, to name but a few.
Local companies have also started to invest in shipping, for example the giant conglomerate ETA-Ascon, which has huge expansion plans in the shipping sector and Gulf Energy Maritime (GEM), which is rapidly expanding its products/chemical carrier empire. Plans are in hand by local companies to acquire almost every type of vessel, including containerships, bulk carriers, VLCCs, gas carriers down to bunkering vessels and tug/workboats.
Refinery upgrades
However, products and chemical tankers appear to be favourite (together with VLCCs and LNGCs) as the Gulf region is upgrading its existing refineries and building new ones. The local oil producers see vast potential in exporting refined products to Asian and US interests, in addition to the traditional crude oil exports, son to be followed by LNG.
Several initiatives are being put together to woo maritime companies into a cluster type environment, which Dubai prides itself on. One of the most ambitious is the Dubai Maritime City project, which is an artificial peninsula currently under construction between the huge Dubai Drydocks complex and Dubai’s Port Rashid.
As at the end of January, the ground was being laid using large dredgers to position the spoil and rock carriers to lay the surrounding breakwaters. The developers’ plans include repositioning the large Al Jadaf repair complex to the site, plus creating both office space and leisure facilities.
Located about half way up Dubai Creek, Al Jadaf is a large shiprepair complex which handles over 2,000 ship lifts per year; mainly tugs, workboats, dhows and offshore supply boats. Around five or six large companies are involved with repair and maintenance on site, including Goltens. There are another 200 or so bucket ship type enterprises offering all kinds of marine services, both large and small at Al Jadaf.
The planned repair and maintenance area of Dubai Maritime City will include a dockyard, ship lifts, state-of-the-art equipment, warehouses and workshops to serve medium-size commercial vessels, as well as the booming local yacht and leisure-boat sector.
As for the business area, this will include a marina, offices, hotels, restaurants, retail and a leisure complex, plus a flexible exhibition site. An academic area will also be built at a later stage consisting of maritime education, research and development complexes. It is intended to build this city in segments, due to the shear size of the project.
‘Wait and see’ policy
Many companies have reservations about relocating to the new site. However, most have adopted a ‘wait and see’ policy as to what will be offered to persuade them to move into the new cluster. Other maritime initiatives being talked of include a Dubai shipowners’ association and an open UAE registry, which local sources thought was still some way off.
It is still possible to see around 60 large tankers anchored off Fujairah on the other side of the UAE peninsula. These are mainly waiting for orders, or taking on supplies, spare parts, changing crew, or bunkering. The ships are serviced by local agencies based in Dubai, due to the proximity of the modern international airport, which is claimed to be ideal for crew changes, supplies and airlifting spare parts.
Tankers started the Middle East shipping revolution in the 1950s and 1960s. However, it was the 1970s which saw the start of the massive investments in ports, oil terminals, airports and other facilities, as each Gulf ruler tried to outdo the other. The huge shiprepair complexes in Bahrain and Dubai were also built around this time, and have since been and are still being regularly upgraded.
Dubai Drydocks has diversified into shipbuilding and is constructing a hydrolift and assembly facilities alongside the giant shiprepair complex. Both Goltens and Unitor have had to move out of the yard to make way for the new shipbuilding initiative, which has already won an order to build the hulls of two Aker H6 semi-submersible rigs to DNV class.
Of course, LNG often crops up in conversation in the region as Qatar is only a short hop away from Dubai by plane. Such is the lure of LNG that several concerns involved in the service sector, including the leading classification societies, have opened up shop in Qatar.
Huge repair complex
In Qatar, there are plans to build a giant repair complex at Ras Laffan, about an hour’s drive from Doha, which will have both Dubai Drydocks and Bahrain’s ASRY looking over their shoulders. This $1 bill complex is expected to house two VLCC graving docks and two LNGC graving docks. The company behind this plan is Qatar Gas Transportation (Naqilat), a state concern which went public in January. The company has said that it intends to get into shipbuilding, shiprepair and shipowning and already has a considerable stake in over 50 LNGCs, which is expected to increase rapidly once the Qatar gas trains come on stream.
Iran’s vast potential can already be seen as it already has one the best run tanker companies in the world – National Iranian Tanker Corp (NITC), which is doubling its fleet of VLCCs and LNGCs. Grøstad said that Iran’s Bandar Abbas and Bushehr shipyards are also well run, attracting many outside service industries.
Naturally, the Dubai business community hopes that the current problems in Iran, and to a lesser extent Saudi Arabia, can be sorted out in an amicable fashion; otherwise this massive investment could come to nothing – a bubble waiting to burst.