The GCC’s hidden gem

Emerging as a global oil hub and most visited tourist destinations, modest Fujairah shows it has more to offer GCC contractors than its infamous Gabbro rock.

Beyond the bustling streets of Dubai and Abu Dhabi, hidden behind a majestic mountain range, one of the UAE’s more modest Emirates is quietly preparing for a surge in its construction market.

Known by some as ‘the jewel of the Middle East’, not least because of its exotic landscape and strategic location, Fujairah is expected to become a key competitor in the UAE’s construction market, attracting developers, consultants and contractors from around the GCC as it emerges to become one of the region’s most popular tourist destinations and global oil hubs. As a tourist destination, Fujairah’s attraction is mostly based upon its unique characteristics. As well as being the only Emirate that is almost totally mountainous, Fujairah is one of the few places in the region that continues to offer a quaint, rather than contemporary get away.

Other draws include an array of natural beauty-spots, from unspoiled, sandy beaches, to waterfalls, coral reefs and natural marine reserves. “Fujairah is well positioned to be a destination for tourism given its location on the Gulf of Oman and its natural beaches, coral reefs and mountainous terrains,” explains Ammar Al Assam of Dewan Architects, currently working on several projects in the region. “As a result, in the last few years there has been a variety of tourism projects, mainly waterfront hotels, springing up on the famous Al Aqa beaches.”

One of the most infamous tourism projects in the region is the US $817m Al Fujairah Paradise. Located between three mountains, the development is set to provide 1,000 five-star villas and a 250-room hotel with a view to boosting the number of visitors and foreign investors to the area. Similar projects include the Al-Aqa Hotel resort, Fujairah Complex and Fujairah Mall, all of which will include a number of tourism facilities and are being built by UAE-based Commodore Contracting Company. “One of the reasons Fujairah is on the verge of rapid development is because it is a prime tourist destination in the UAE,” confirms Commodore branch manager Shadi Abu Khuzam. “In the next ten years, it will have three times the number of hotels and resorts that exist today, and it is very possible that the airport of Fujairah, which is currently used only for domestic flights and small private aircrafts, will be expanded to meet the standards for international flight.” Thus, he explains, for contractors with experience in hotel and airport projects, Fujairah presents a goldmine of opportunities for new contract wins.

But the best thing about Fujairah is that opportunities are not limited to this one sector. Equally important, is its huge potential to become a global oil hub due to its strategic and unique location on the open sea of the Arabian Gulf and the Indian Ocean, close to both East and the West shipping lanes but outside the Strait of Hormuz. Not only does this make Fujairah a convenient refueling or ‘bunkering’ station for thousands of ships and tankers travelling through the region every year, but an extremely safe port during times of conflict.

These factors, in addition to its convenient offshore anchorage area, characterised by deep water and a smooth sea bed close to shore, (enabling large tankers to access the port) have rendered Fujairah the second largest bunkering point in the world after Singapore. Currently, it caters for as many as 100 ships a day in need of fresh supplies, fuel and repair work, and its emergence as an oil hub has followed naturally.

“In the Middle East, oil and oil products are regularly transported from one country to another due to some countries having a deficit of products and others having a surplus,” says oil storage company Vopak’s Christiaan Nielsen. According to him, Fujairah plays a massive role in accommodating these oil flows, through both its tank storage facilities and product blending services. “When refineries are set up they are focused on the refining of oil, and on making the building blocks for other products such as gasoline. For them, storing products is a hassle and they’re not always competent in the blending process. Fujairah, due to its strategic location, is a region which focuses on delivering that service.”

So, how does this translate into a demand for construction? For a start, it means Fujairah is looking at expanding its port, increasing the number of oil storage tanks and developing its infrastructure, not to mention building an oil refinery to maximise the region’s capabilities. This is in addition to the Abu Dhabi Crude Oil Pipeline project, designed to transport 1.5 million barrels of crude oil per day over a distance of 370km ready for exportation out of Fujairah.

“Currently, the Emirate of Fujairah has ambitious plans to increase the oil storage capacity, with major storage tanks planned to store Fuel Oil, Crude Oil, Gas Oil and Jet Oil,” explains marine engineering firm Topaz’s CEO Fazelbhoy. “Recently, Topaz was involved in the piping and structural works for BAM International on the offshore jetty extension of Vopak Horizon Fujairah Limited, and we hope to be part of future developments as well.”

According to the figures declared by government advisor Dr Salem Khalil in April this year, the existing cluster of tanks along the Fujairah coast currently stands at 120 with a storage capacity of 3.1 million cubic metres. By 2012, this is expected to increase significantly, with an additional 140 tanks and an extra 4.2 million cubic metres worth of capacity. Incidentally, some specialised engineering firms are already involved in these expansion plans through land reclamation projects. Fujairah Bulk Shipping engineering is one of them. “At the moment we are involved in one of the largest land reclamation projects in Fujairah,” says chief operating officer Jamie Staggart. “The completed land mass will be used to process and export oil delivered from Abu Dhabi through the new pipeline.

“The project is expected to be completed by mid 2011, shortly after which we expect a lot of the building for the oil storage facilities to commence.”

Among the storage facility projects already under construction is the expansion of Vopak’s oil terminal, on track to add 600,000 cubic metres of storage facilities and four to six additional berths. “Currently we have 48 tanks, but we’re looking to add another 21,” says Vopak. “At the moment, the region is expanding, so there are several other companies doing the same thing, and in the future we will be looking at even further expansion opportunities.”

Speaking about the oil refinery project in Fujairah, he adds: “There are plans to build four more oil refineries across the GCC, one of which will be in Fujairah. Fujairah is a good location for an oil refinery because of its storage facilities. It means the oil can go straight from the refinery to the storage facilities via a pipeline without having to use vessels. So far, the project has been announced, but as yet I don’t think they’ve awarded the main contract.”

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Posted by: Original Joe

Great article! I have visited Fujairah maybe twice with my family in the past 3 years for an afternoon drive through the mountains. It didn't look like much but if the potential is there businesses will find a way to succeed.

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