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Saudi Arabia plans major shipbuilding yard in Yanbu

Saudi Arabia plans major shipbuilding yard in Yanbu
A major new shipyard, is to be constructed by Saudi Arabia and an international shipbuilding joint-venture partner as part of a major port expansion set to be completed in 2018-19, and a minerals hub valued at $1.8 billion, are planned for the west-coast industrial city of Yanbu, a senior Saudi official said recently.

“We have a huge project for shipbuilding. That will add another edge to industry in the country and the region,” Alaa Nassif, executive president, Royal Commission at Yanbu, told Seatrade Global on the sidelines of MEED Petrochemicals 2014 conference in Dubai, to which he made the opening address.

When asked whether vessels for construction at the new yard included offshore or dry bulk, Nassif said: “Actually, it will be both, and more than that. But it is not the time to talk about it because we are at the very early stage now of going into the detail with the company, one of the world's largest shipbuilding companies. I cannot say who now. They have a Saudi partner.”

Founded in 1975, The Royal Commission of Jubail and Yanbu exists to promote petrochemical and energy-intensive industries at the two cities, which claim to be the largest concentrated industrial cities in the world, with a combined size of over 1,600 sq km. A third, Ras Al-Khair, site of a new aluminium smelter, has been added to the charter, on the east coast north of Jubail.

“The intention is [also] to have a minerals distribution hub that can serve the whole region. Many industries are now investing in Africa, and then moving their deposits all over the world. We are targeting them to have Yanbu as the hub for their minerals distribution in the future. Some of the top companies will [participate],” he said.

Data from the International Monetary Fund put Saudi growth at 7.4% and 8.6% in 2010 and 2011 and forecast a figure of 4.4% this year. Drewry Maritime Research put Saudi port capacity, including east-coast facilities, at 9.3m teu in 2012, while IMF-based growth estimates show predicted throughput of 7.17m TEU in 2014. Yanbu and Jubail both have industrial and commercial ports.

Saudi Arabia is fast waking up to the importance of the strategic location of its west coast on the world’s main shipping lane. Like other Saudi Red Sea ports, Yanbu is ideally situated between Colombo and Suez, 300 km north of Jeddah Islamic Port, the kingdom’s main cargo gateway. A major new facility, known as King Abdullah Port, at Rabigh, is also now operational and should see year-end capacity of 2.5m teu, while another is being developed at Jizan.

Nassif said that Yanbu Industrial City had invested $40bn to date in petrochemicals, refining and desalination, and expected to see a further $21bn of spending on new hydrocarbons downstream projects, including autoparts, as well as the minerals hub, by 2020. “When we talk about the multi-logistic hub, we are considering several industries that will benefit, including a special trade zone, which will facilitate the major shipping lines [calling] for transhipment business,” Dr. Nassif said.

Today, Yanbu’s ports have a total capacity of 190m tons a year, and seven terminals with 24 berths. “Rabigh is already operating. We will be synergised together. Some of the functions will be in Yanbu and some in Rabigh. Rabigh is at a growth stage. Yanbu is already a mature port, but we are there to support the new port,” he said.

The water depth at Yanbu allows the world’s largest vessels to come alongside. “We have a draught of 24-26m. The Red Sea is very deep. We have depth in the middle of over 1 km,” he said. “At the same time, Yanbu is on the international shipping line. All of that makes us think how to capitalise on these opportunities and position Yanbu in the right way.”