Fujairah’s ship is coming in – and bringing tourists as well as trade

Fujairah Port

• The emirate’s port is expanding its facilities for freight and visitors
• Adnoc is building an LNG plant and oil storage facilities in Fujairah
• Hotels are opening and a rail link will improve connections across UAE

Fujairah’s position on the Gulf of Oman coast has become its defining characteristic. The location has helped the emirate build a thriving maritime sector and given the rest of the UAE an alternative to the Strait of Hormuz. 

The Port of Fujairah opened in the early 1980s and successive development projects have added berths and increased its cargo handling capacity.

It is now one of the world’s biggest sites for bunkering (refuelling ships), after Singapore and Rotterdam. The port has about 6 miles of quays, two oil terminals and services for container, general cargo and cruise ships.

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There are plans to expand Fujairah’s hydrocarbon facilities. National oil company Adnoc is building a liquefied natural gas plant in Fujairah that could provide 9.6 million metric tonnes of gas per year. It is set for completion between 2026 and 2028.

Adnoc is also building huge oil storage facilities in the northern emirate. These have capacity for up to 42 million barrels and are due to open this year, with a link to the port to follow. 

In mid-January, Adnoc announced a partnership with the Fujairah Natural Resources Corporation, Masdar and Oman’s Earthshot Prize winner 44.01. The partners will test 44.01’s technology for mineralising carbon dioxide, one possible route to decarbonising the energy giant’s operations.

Fujairah is also expanding the smaller Port of Dibba, building berths for commercial ships and installing cranes with a capacity of 4,000 tonnes an hour.

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Such initiatives reflect the optimism in the emirate’s economy. National Bank of Fujairah recorded the highest operating income and profit in its history last year.

Operating income rose 25.8 percent to AED1.8 billion ($490 million) and operating profit was up 29.4 percent to AED1.2 billion, in the results released on January 25. Deposits were up 11 percent year-on-year.

The bank’s deputy chair, Raja Al Gurg, attributed the performance to “the pace of economic recovery of the country”, but highlighted that “mild recessionary pressures” had been forecast for 2023.

Karti Inamdar, senior credit analyst at Capital Intelligence Ratings, suggests fears of a slowdown might be misplaced.

“Growth rates may slow down because in 2022 they were coming off of a slow 2021, but I think the bank will find adequate business opportunities. They have enough capital to support growth and the banking system has adequate liquidity,” she said.

Inamdar added that the National Bank of Fujairah’s 2022 performance was a reflection of how well the wider UAE economy has been doing as oil prices rise.

“There is business for everyone,” she said. “The northern emirates do well when the UAE does well. They don’t compete with Dubai and Abu Dhabi – they complement them. There is always some spillover business that they can expect.”

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That view is supported by the performance of Fujairah’s hospitality sector. According to real estate consultancy CBRE, revenue per available room – a key metric for hotels – grew more strongly in Fujairah (26.7 percent) than in Dubai (20.6 percent) during the second quarter of 2022.

Over the year as a whole, Fujairah had higher growth in occupancy levels than the rest of the UAE and one of the strongest growths in terms of average daily rates, according to CBRE.

More hotels are being added. The 228-room DoubleTree by Hilton Fujairah City opened in December at the Al Taif Business Centre. Emaar Hospitality opened its 167-room Palace Beach Resort Fujairah last summer.

“Fujairah has come out of Covid quite well, with hotels generally performing at higher rates and occupancy levels than pre-Covid. This can be attributable to an increase in staycations, but also increased awareness and marketing efforts from newly opened hotels and resorts,” said Christopher Lund, head of Mena hotels at property consultancy Colliers.

Infrastructure links under construction are set to improve connections with the UAE’s bigger cities, for both visitors and businesses.

The Etihad Rail network will allow passengers to travel from Abu Dhabi to Fujairah in 100 minutes. The opportunity to move freight quickly inland from the Port of Fujairah could prove even more valuable.

“Better rail connectivity throughout the country would likely produce positive spillovers from the established economic hubs of Abu Dhabi and Dubai into the other emirates,” said Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington.

“Any new linkages that move more people and goods through emirates like Fujairah can really help bolster these local economies, which exist in the shadow of energy-rich Abu Dhabi and the commercial hub of Dubai.”