Gulf countries navigate billions into mega port projects

From Duqm in Oman  to  Boubyan Island in Kuwait, Arab Gulf states are tapping oil revenues to expand and  construct  ports  alongside  mammoth industrial zones. Regionally, over US$35 billion  is  being  spent  on  various  port projects  to  drive  trade,  job  and  non-oil economic growth.

The  need  to  economically  diversify has spurred the strategy to become a hub for  global  logistics  and  non-oil  exports, as  geography  puts  the  region  between the trade flows of the West and the ever-burgeoning economies of the East. But the countries  risk  vying  for  the  same  cargo traffic, and ending up with overcapacity against  a  backdrop  of  slow  global  trade flow and anemic Western economies.

Gulf  countries  are  counting  on  the increased  trade  links  between  them  and Asia  and  their  growing  attraction  as  a gateway  to Africa.  Some  Gulf  ports  are seeking  a  trans-shipment  role  to  serve underserved markets of Iraq, Iran, Pakistan and other neighbouring countries that do not have the economic or political ability to attract ships.

Last year, the wealthy emirate of Abu Dhabi launched the mega port trend, by inaugurating  the  US$7.2  billion  Khalifa Port, with an initial capacity of 2.5 million twenty-foot equivalent units (TEU), backed up  by  the  Khalifa  Industrial  Zone Abu Dhabi (KIZAD), all built on a man-made island on the edges of the UAE capital two thirds the size of Singapore. The modern port replaces Mina Zayed, a 40-year old facility located inside the capital that was getting close to its 1 million TEU capacity.

“Forty  years  ago  it  was  fantastic  to have a downtown location," said Morten Lund,  Commercial  Manager  of  Khalifa Port Container Terminal. "Now ships are getting bigger, they are getting wider and they  are  getting  deeper  and  they  have  a lot more cargo on board, which meant in the last many years it was impossible for the shipping lines to serve the Abu Dhabi market directly."

Bigger ambitions
But Khalifa Port has bigger ambitions than just replacing an old facility. The port and industrial zone are forecast to create over 100,000 jobs and contribute 15% of Abu Dhabi’s non-oil GDP by 2030, when capacity is set to reach 15 million TEU. Dubai’s Jebel Ali port, the world’s No. 9 container  port  that  lies  just  45  km  from Khalifa Port, now has a 14 million TEU capacity that will reach 15 million TEU this year and increase to 19 million TEU by 2014.

“There  is  the  existing Abu  Dhabi business that we need to cater for in a way that allows Abu Dhabi businesses to grow and prosper,” said Lund.

Khalifa  Port  is  seeking  to  serve  the rising exports from Abu Dhabi firms like Emal, which is building the world’s biggest aluminium  smelter  and  petrochemical producer, Borouge, and also attract trans-shipment  business,  which  is  currently catered by Dubai’s Jebel Ali port and to a lesser extent Khor Fakkan port. Khalifa Port  is  currently  doing  trans-shipment business  for  the  Indian  subcontinent for  Italy’s&nAir Jordan XI 11 High