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Tue 24 Aug 2010 04:00 AM

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Yanbu and Jubail, Saudi Arabia

They might both have miles of unspoilt beaches, but don't expect to find sunbathing tourists  at either Yanbu or Jubail in KSA. You will find machinery, as oil becomes ever more valuable.

Yanbu and Jubail, Saudi Arabia
EXPORT The deepwater ports in these industrial cities make them ideal for oil tankers.
Yanbu and Jubail, Saudi Arabia
BIG LIFT A giant crane lifts part of an oil refinery in Jubail.

They might both have miles of unspoilt beaches, but don't expect to find sunbathing tourists  at either Yanbu or Jubail in KSA. You will find machinery, as oil becomes ever more valuable.

These industrial cities exist only for one reason - oil. As a result, demand for heavy kit is still booming. Located on opposite sides of the country, both cities are overseen by a ‘Royal Commision', effectively a municipality that runs both places in spite of their disparate locations. Although less well known than Mecca, Jeddah or Damman, it is highly likely for years to come that Yanbu will be a major area of construction.

The town's rise to prominence came in 1975 when the government designated what was then just a small settlement to be one of the new industrial centres - the other being Jubail on the east coast. Since, Yanbu has grown to be KSA's ‘second' port after Jeddah as an important petroleum shipping terminal. The city also acts as a port for Medina.

As a result, the city of 250,000 provides some strong opportunities for contractors - providing ample opportunity for machinery suppliers, as well as those who maintain and operate heavy equipment and cranes.

In summer 2009, King Abdullah opened several projects in the industrial city, including the US $5.3bn Yanbu National Petrochemicals Company, road and bridge projects worth US $35m and US $533m of other projects all based in the Yanbu 2 project.

He also opened a SABIC development as well as an US $800m power station expansion. Meanwhile a US $3.7bn desalination plant has been signed off and an expansion plan for the Prince Abdul Moshen Bin Abdul Aziz airport has been launched.

Confidence in the future of Yanbu remains very high. "Jubail and Yanbu are very successful stories. When they started in the 1980s everybody was saying ‘these people are crazy, don't bother doing it'- everybody was grumbling about its failure and now everybody is talking about its success. It proved to be the right decision at the right time," says Saudi deputy minister for town planning, Dr Abdulrahmen Al Shaikh.

"I know there are some who have their doubts about the success of the economic cities, but this is the nature of people. I believe they will prevail, because the Kingdom's economy and resourses are sound and if it is the will of the government to support it, then it will go on."

Oil barons Conoco Philips plant to built another 400,000bpd  refinery in the city, which will inevitably lead to big contracts for the usual suspects, but will also open the field for firms that rent and supply specialist equipment and services too.

Despite our sniffy comments about tourism and hotels, Yanbu does boast at least one five-star option, the Radisson Blu. Also, tourists could try diving on the huge natural coral reef that surrounds the busy harbour.

Much like Yanbu, its congruent city on Saudi Arabia's west coast, in 1975 Jubail was designated as an industrial city, and is now the largest industrial complex of its kind in the world.

Having been described as far back as 1983 as ‘the largest construction and engineering project ever attempted', the city shows no sign of slowing down. The city is now expanding to create a Jubail Two, an 84km expansion project located some 8km to the west of the established Jubail One.

Recent months have seen a flurry of big value contracts awarded, with little sign of a slowdown. Recently Saudi Arabia's Royal Commission for Jubail and Yanbu awarded five construction contracts for Jubail Industrial City worth a total of US $257.5 million (SR964.3 million) while roads and highways haven't been neglected, with an announcement made last month concerning a number of bridges which will make access to the Aldawi district much easier for heavy trucks and transport.

The largest contract, worth $93.5 million, was awarded to Azmeel Contracting and Construction Corporation in association with Saudi Tumpane Company for the first phase of Jubail's Community site development. The contract will run for three and a half years.

Meanwhile, Saudi Aramco handed out 13 EPC contracts, worth a total of $9.6 billion, to undertake work on its Jubail Export Refinery mega project.

However, just because of the massive spending in this part of the world, don't automatically assume that the money is freely spent. For a start, anywhere in Saudi is something of a closed shop, and areas that are tightly controlled by the government due to the oil-based infrastructure obviously hamper free trade. That said, a lot of large international companies, such as Bechtel are involved in engineering the landscape, and so it is logical that they might employ outside contractors and suppliers for items such as specialised heavy lifts or perhaps the supply and fit of crane anti-collision systems.

Manufacturing and infrastructure remain high on the agenda in the city. In anticipation of increased growth, Suez Energy International and Acwa Power Projects are constructing a $3.4 billion independent water and power plant for the Power and Water Utility Company for both Jubail and Yanbu. To get the four-block gas-turbine power station online as quickly as practical the power company are gong to need an influx of cranes and specialists for this type of infrastructure.

There are also tenders going out for desalination plants, as well as the construction for more general facilities, such as a community centre. For the first time, it is now possible to apply for building permits online - a radical step in Saudi Arabia.