Fujairah Plays Key Role in Abu Dhabi’s Oil Expansion

Oil Expansion
Bahrain’s Daily News (8 January 2008) cites a significant role for Fujairah in aid of Abu Dhabi’s booming oil business.

Abu Dhabi’s oil capacity stands at around 2.8m barrels per day, and according to an OPEC survey the UAE pumped around 2.3m bpd last month (AD holds more than 90 per cent of the country’s oil reserves).

Refinery Capacity Needs
Abu Dhabi plans to almost triple its refinery capacity from 485,000 bpd and the Abu-Dhabi government-owned International Petroleum Investment Company (IPIC) plans another refinery in Fujairah, on the UAE's east coast.

The Fujairah plant will have a capacity of under 200,000 barrels per day.

Fujairah’s Strategic Location
In addition to Fujairah being able to increase Abu Dhabi’s refinery and bunkering needs, other recent reports have highlighted the eastern emirate’s strategic role not just because it is a burgeoning port but because it faces toward the Gulf of Oman and the Indian Ocean.

Every time security is threatened in the Arabian/Persian Gulf, especially with the UAE and Iran having relationship problems, the flow of oil through the narrow Strait of Hormuz is impeded and the oil price rises as fast as the blood pressure of the key players.

To overcome this constricted ‘throat’ to the Gulf, the UAE is building both an oil line and a gas line from Abu Dhabi (and Qatar).

Discussion has also taken place on the viability of establishing a canal that will connect Dubai and Fujairah and facilitate the flow of ships (check this link and this link for further information on this proposal).

While back in 2007 there were predictions of an oil business boom for Fujairah, the Daily News did not indicate how much the current financial downturn will curb Fujairah’s role.

A recent article in The National (28 November 2008) made a gloomy prediction.

See the gloomy announcement in this update (10 January 2009).

Dr Geoff Pound