Fujairah continues to expand

Mar 03 2014

Fujairah has come a long way in a short space of time and the port’s expansion as a major tanker hub is still continuing, both physically and in the planning stage.

Better known in earlier years as a major anchorage, primarily serving tanker traffic waiting to enter the Gulf, the Port of Fujairah (POF) has now become a hub port for petrochemicals and an export gateway for aggregates. There is also a crude oil loading terminal accessed through three single point mooring buoys (SPM), connected to a pipeline running from Abu Dhabi.

Plans are being put in place to build a refinery, an LNG regasification plant and at least one, possibly two VLCC jetties together with crude oil storage tanks on land. Some of the storage companies, which already have facilities at POF, are also looking to expand their tank farms and terminals on the back of the increase in business.

This commitment to build a tanker hub at the port has not been undertaken at the expense of the anchorage, now known as the Fujairah Offshore Anchorage Area (FOAA). It is still very much in use and is now well controlled by the port authority, which has instigated a dedicated slot system similar to that found at Gibraltar but on a far greater scale.

Illustrating its popularity, there are 12,000 vessels calling annually at the anchorage and last year, the number of vessels using the slots grew to 13,490 - an increase of 13.7% on the number of vessels calling in 2012.

The anchorage was reorganised due to the installation of the SPMs and today there are 114 anchor positions in seven zones. To discourage owners from dumping, or laying up vessels in the anchorage, punitive charges set in after 10 days’ free anchorage time. The POF is currently seeking ways to increase the size of the anchorage, which stretches for about 12 miles offshore.

In addition, to the three already in operation, there are slots reserved for up to another 13 SPMs. With a water depth of 24 m, they will be capable of handling VLCCs.

Given the volume of vessels using the anchorage down the years, a huge marine service centre has built up at Fujairah offering crew changes, bunkers, ship supplies and other services that a vessel might need.

There are 13 bunkering companies alone, which have helped to place Fujairah second in the world’s bunkering league table. Bunkering operations are self-regulated and there is access to anti-spill equipment and Yokohama type fenders, which are also used for ship-to-ship transfers off the port.

In addition there are also around 55 registered agents in the port, from the huge conglomerates, such as Wilhelmsen Ships Services (WSS), ISS and GAC, plus Kanoo to much smaller operatives.

Unique position

Fujairah’s unique geographical position about 124 miles outside the Gulf (around 24 hours steaming time) and   about 70 miles’ steaming from the Strait of Hormuz, at which point the insurance costs rise for vessels entering the Gulf, persuaded the various companies and the government to invest in storage facilities, jetties and loading buoys in and around the port area.

Although the anchorage has been around for decades, almost ever since tankers started using the Middle East Gulf terminals, coming to the fore during the Iraq/Iran war, the initial construction of the port area only began in 1978, as part of the UAE economic development.

Full operations commenced in 1983 and for more than two decades, it was a general cargo and container port.  The first oil terminal didn’t come on stream until 2010. But since then tanker sector expansion has continued at a rapid pace and there is still more to come.

The expansion phase started off with private product tank storage farms with jetties attached via pipelines.  However, today there is now a VLCC loading facility utilising three CALM SPMs about four miles offshore. These are fed by the Abu Dhabi Crude Oil Pipeline (ADCOP), which was completed by the Abu Dhabi-based International Petroleum Investment Company (IPIC) and started operations on 30th June, 2012.

The new 370 km long and 48 inch diameter pipeline was built to reduce the reliance on Arabian Gulf oil terminals, while also reducing shipping congestion through the Straits of Hormuz, cutting insurance costs and saving up to three days sailing time.

Onshore, eight tanks were built of 1 mill barrel capacity each, expandable to 12 mill barrels capacity in total with loading lines of 1.5 m diameter connected to 12 ship loading pumps giving a loading capacity of up to 80,000 barrels per hour per SPM. Each SPM can accommodate tankers of up to 320,000 dwt.

Starting at Habshan in Abu Dhabi – the current collection point for Abu Dhabi’s onshore crude oil production – the  ADCOP pipeline runs through the emirates of Sharjah and Ras Al Khaimah to the port of Fujairah and offshore.

It has been designed to transport 1.5 mill barrels per day of crude oil from ADCO’s Habshan facility over a distance of 370 km to the export oil terminal in Fujairah, making it the longest pipeline in the UAE and one of the longest in the Middle East. The new pipeline is claimed to handle over half of the UAE’s daily crude exports.

Its capacity can be boosted to 1.8 mill barrels a day if required, by using a special dredging agent to reduce friction, which would account for around 75% of UAE crude oil exports and some 10% of all the oil currently being shipped through the Strait of Hormuz.

The new pipeline offers Abu Dhabi great flexibility to increase crude oil production, as the existing Jebel Dhanna crude oil loading terminal will remain operational, the operator ADCO said. ADCO is the pipeline operator, working under a lease agreement with IPIC.

The Murban crude oil is intended mainly for shipment overseas but can also be directed to the adjacent new Fujairah refinery, soon to be constructed by IPIC and due to open at the end of 2016/beginning of 2017.

In addition, during this decade of expansion, the private storage companies started to build up their operations at Fujairah to cater for trading activity, as well as bunkering operations. By the end of 2012, Fujairah had 4.07 mill cu m storage capacity. This rose to more than 6 mill cu m capacity last year and by 2017, the storage capacity is expected to reach over 9 mill cu m.

To cater for bunker suppliers and traders alike, the port operates seven oil berths – the first 850 m long jetty dredged to 15 m and a second 1,500 m long jetty dredged to 18 m depth. Further expansion will add another 830 m of quay also with a depth of 18 m. The deeper draft berths can handle tankers of up to 180,000 dwt.

An example of a private storage company’s rapid expansion at Fujairah is the case of Vopak Horizon, which at the end of last year announced its seventh phase of expansion adding another 478,000 cu m of crude oil storage following the signing of a long term contract with an unnamed customer. Once in operation, this will bring Vopak

Horizon Fujairah’s total capacity to more than 2.6 mill cu m of storage for both crude and products.

VLCC jetty

The latest phase will involve the construction of five crude oil storage tanks, a manifold, plus a pipeline connection to a new VLCC jetty planned for the port. Another VLCC jetty is also on the drawing board.

The company claimed that this project will involve the construction of the first crude oil tanks in the Middle East for independent storage operations.

Vopak Horizon Fujairah is a joint venture between Royal Vopak (33.3%), Horizon Terminals (33.3%) - wholly owned by Emirates National Oil Co (ENOC) - the Government of Fujairah (22.2%) and Kuwait’s Independent Petroleum Group (11.1%).

Vopak said that this expansion project will strengthen Fujairah’s status as one of the world’s leading hubs for crude oil and oil products, with room for further expansion. The new phase expansion and jetty connections are expected to be commissioned in about June 2016.

In addition, Vopak Horizon Fujairah also commissioned four oil tanker jetty pipelines connecting its terminal to the port for a wide range of products.

Saeed Khoory, ENOC CEO, said at the end of last year: “We are thankful for the support of the Government of Fujairah in the expansion of the Vopak Horizon Fujairah facility. Over the years, Fujairah has firmly underlined its global credentials as one of the top three oil storage hubs, next to Rotterdam and Singapore. The addition of more storage space at Vopak Horizon Fujairah will significantly support the region’s oil trade sector and enhance the convenience of all key stakeholders by providing world-class logistics support.”

At the same time, Eelco Hoekstra, chairman of the executive board and Royal Vopak CEO commented: “With its strategic location outside the Strait of Hormuz, combined with the available infrastructure and knowledge, the Port of Fujairah is very well positioned to become a crude oil hub in the Middle East. We are excited to build together with our partners the seventh expansion of Vopak Horizon Fujairah and add crude oil tanks to safely serve our customers.”

According to estimates published by Vopak, the global non-captive oil storage market is more than 220 mill cu m.  With the Gulf region accounting for nearly 50% of the world’s crude oil reserves, the new facility will significantly enhance the efficiency of operations of the oil producers by facilitating efficient logistics support, the company claimed.

Mentioned earlier in this article, the Fujairah Refinery project is a strategic UAE Government initiative through  PIC to construct, operate and maintain a refinery complex in Fujairah, close to the new ADCOP pipeline and oil terminal and the port’s deepwater oil export terminals.

The refinery will be designed to process a mixture of UAE crudes, such as Murban, Upper Zakum and Dubai, plus other regional and opportunity crude oils and will have a processing capacity of about 200,000 barrels per day. It is also expected to produce middle distillates primarily for the UAE’s Northern Emirates, for export and for bunker fuel to meet the demand at Fujairah.

It will have its own power generation capability to meet its power requirements and it will also provide power to the grid of the Northern Emirates. The refinery is scheduled for completion at the end of 2016.

The project management consultancy contract for the refinery’s front-end engineering and design phase (FEED) was awarded to Shaw Stone & Webster in April 2011. The project is currently believed to be in its pre-FEED phase.

Fujairah has also been identified as an optimal location for the development of an LNG import terminal. At present, it is planned to operate a regasification unit offshore (FSRU), which could be in place by the second quarter of this year. This will be followed by an FSU, which is expected to be in place a year later.

Other projects in operation, or planned, at the port include the UAE’s strategic grain reserve terminal and aggregate berths for loading bulk carriers with building material for construction projects in the Gulf.

A new port control tower complete with a vessel traffic control system was opened last year and a freight only railway line is going to be built, connecting Abu Dhabi and Dubai with a spur going into Fujairah.

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