Reports indicate that PetroChina is in talks with companies and official in Fujairah to build an oil storage facility at Fujairah port. How important will the Chinese market be to the future of the energy sector in Fujairah?
NATAFJI: I think Fujairah is more important to the Chinese than vice versa. We already have five or six companies that are building tanks. The Chinese are only one of the companies that are building more storage dedicated to Chinese interests. It is up to them really whether or not it is crucial for them to have their own dedicated tanks. I do think there will be enough spare capacity to entertain excess demand. Most of the builders here are investing to build tanks for third party storage.Â Right now, FNG is building over 600,000 cubic meters more storage space than we have now and this will all be for third party storage, not for our own use.Â So far the Chinese do not have a presence in Fujairah. There are plans for them to come into the market. They are looking at building a tank farm of one million cubic meters, which would cost between $150m to $200m, which is what they are looking at.
How would you describe the infrastructure in Fujairah with respect to the oil and gas industries? What areas should be prioritized for improvement?
NATAFJI: The infrastructure in Fujairah needs to be re-planned. Nowadays, there is a rush into the market in Fujairah. We have seen many companies come in the last two years. The whole area to the north of the port of Fujairah has become petrochemical sector, so this really needs to be redone. The road to Khor Fakkan will need upgrading to handle new payloads.Â The amount of investment taking place right now is huge and that will enable the government to invest more in the development of the infrastructure.
Will the recent wave of instability in the region cause oil industry players to flock towards Fujairah, whose port sits outside the Strait of Hormuz?
NATAFJI: This was always the advantage of Fujairah. This goes back to the early 80â€™s. When there were problems between Iran and Iraq a lot of business flocked to Fujairah. The Kuwaiti tankers used to come to Fujairah to transfer small tankers to big tankers for shipment to the Far East or North America. So Fujairah became a hub for ship-to-ship transfer during any war or hostility. This was for two reasons. One reason is that the insurance premium is less and the other is that danger or war risk is less. So Fujairah is a preferred port both from a commercial and a war risk point of view.
The UAE recently announced a AED 5.7bn ($1.6bn) investment to boost water and electricity networks in the northern emirates. Will this investment deliver enough additional supply to eliminate the long waiting periods and service interruptions for water and electricity in the northern emirates?
NATAFJI: The UAE has depended on Fujairah over the last decade as a major source for water and electricity. Right now, Fujairah is the main source of desalinated water for the whole of the UAE. Because of the economics of power and water production, they both have to be together. Combined cycle plants maximize economies of scale and that is what we have now in the north of Fujairah.Â There are several initiatives in oil services such as bunkering and the export of crude, and now we are expecting a refinery coming in the near future. We expect the downstream activities in Fujairah to flourish due to these developments taking place.Â In addition, the new road from Dubai to Fujairah is going to speed up development and create growth in Fujairah. The distance from Jebal Ali to Fujairah will be the same as from Jebal Ali to Ajman. This is going to create a lot of opportunities for us in Fujairah. The highway is 80% complete, by the end of the year it will be ready.
Fujairah has never tried to copy the growth of others. Most of the problems the world is facing from the financial meltdown are due to trying to finance investment through debt, which is really not a prudent policy. We always believed in using our own natural resources.
The peaks and valleys of the economic cycle have generally been more subdued in Fujairah than the other emirates. How has Fujairah fared compared to the other emirates as the UAE moves toward recovery?Â
NATAFJI: The reason Fujairah has not experienced the sharp peaks and troughs is because of the prudent economic policies of the government of Fujairah. The government always held the view that the emirate should follow an economic policy within its own means and what it can afford. Borrowing to enhance growth or speed up the development cycle might create false expansion that is not in line with the fundamentals that justify that kind of expansion.Â Being here for 30 years, I have always watched the governmentâ€™s policy and particularly His Highness the ruler, and that policy has always been to play to our advantages. Fujairah has never tried to copy the growth of others.Â Most of the problems the world is facing from the financial meltdown are due to trying to finance investment through debt, which is really not a prudent policy. We always believed in using our own natural resources. For example, we have mountains in Fujairah that are a great source of aggregates and rocks for the rest of the Gulf. So we have always encouraged investment in this sector because we knew thee would always be demand. It is always more prudent to be slow and steady than to be volatile. We try to meet demand, not create supply and then wait for demand.