Peaceful port tests deeper waters

Fujairah has always been one of the more tranquil members of the United Arab Emirates, famed more for its scenery, its natural attractions and status as a holiday venue than the ambition and relentless development of some of its peers. But of late it has undergone something of a transformation.

The city centre is still less metropolitan than most other emirates, but a smattering of high-rise towers has shot up in recent years, and the streets are noticeably busier, residents say.

For many years, the emirate has been a leading provider of ground rock aggregate for cement – mined from the craggy Hatta mountains that surround and dominate the city – but the recent increase in its prominence is attributable to its strategic location on the coast of the Indian Ocean.

Thanks to the deep and relatively calm seas off its coastline, Fujairah has emerged as the world’s second-largest bunkering hub for refuelling tankers and ships, after Singapore. The emirate is also expanding into trading and storage, mostly based by the port and in three free zones.

Fujairah can also thank its location for being chosen as the site of a potentially transformative project. Abu Dhabi is building a 360km pipeline stretching from Habshan, south-west of the UAE capital, to the port which, on completion next year, will funnel up to 1.8m barrels of oil a day directly to the Indian Ocean.

This will shave time off the oil’s journey to world markets, and allow shippers to avoid the higher insurance premiums that come with traversing the risky Gulf waters close to Iran.

Perhaps more importantly, it should also allow the UAE to keep exporting a large part of its oil in the event that a conflict involving Iran closes the main Gulf trading artery.

Fujairah’s new crude oil terminal, and many of the fuel storage tanks, will be placed on reclaimed land immediately to the north of the port, costing about Dh900m ($245m), according to Salem Khalil, a government adviser. “We are doing it just to keep up with demand,” he says.

Other significant projects are also underway. A $2.3bn integrated water and power plant is expected to come online later this year, solving an electricity shortage. The federal government is building a 78km highway between Dubai and Fujairah to slash the travel time between the two cities.

Officials hope the road, due to open early next year, will bring even more visitors, and entice some Dubai residents to relocate to the calmer, more picturesque emirate.

“The highway will bring a lot of flow to Fujairah. It’s a lot cheaper here than in other emirates – schooling, housing, offices, everything costs less really,” says Khalid al-Jassim, director general of the Fujairah Chamber of Commerce and Industry.

Abu Dhabi’s International Petroleum Investment Company, which is behind the oil pipeline, also plans to construct a 200,000 barrel per day oil refinery in Fujairah, which is pencilled in for completion in 2014.

These investments and a relatively buoyant local economy caused Fujairah’s population to jump by more than 10,000 in both 2008 and 2009 to about 165,000.

Since many newly constructed buildings have no electricity due to power constraints, a housing shortage has caused property prices and rents to continue to climb in spite of the UAE’s recession, residents say.

However, the economic downturn has not left Fujairah entirely unscathed.

Demand for aggregate, the main export, has slumped, and Fujairah’s main selling point to business – its relative cheapness – has been blunted by Dubai’s falling office rents. Moreover, the quickening pace of development has also brought unwanted problems. Oil spills frequently wash up onshore, hurting the important tourism industry.

Some say the spills are no accident. It costs tankers time and money to moor and wash out their hulls properly, so many simply dump oil slops in the sea under cover of darkness, safe in the knowledge that the industry is too important for Fujairah to act, one resident claims.

“Hotels and tourism are important, but oil has clearly been the priority. Some of the natural beauty on land and marine life has been trashed so ongoing vigilance is essential,” the resident says.

Other locals say the government is too cautious, and lacks a long-term plan for the development of the emirate. The port and the quarries make some money, but Fujairah’s economy and industry remains relatively undeveloped, one claims.

Nonetheless, locals are enthused by the emirate’s recent progress and near-term prospects.

“Give us five years and the city will be transformed,” says Mohamed al-Afkham, general manager of the Fujairah municipality. “It will be gradual and we won’t get carried away, but the next five years will be exciting for Fujairah.”