Building a sea change: Expanding capacity to facilitate continuing growth

The importance of the sea cannot be overstated for Qatar. In ages past, the curved sails of dhow trading vessels dotted Gulf waters as merchants helped supply the historical trade routes that developed between the Middle East and Asia. Although Qatar Gas Transport Company’s (Nakilat) gigantic liquefied natural gas (LNG) tankers have since supplanted the economic role of the dhow, the sea’s role in Qatar’s growing economy remains as strong as ever. With about 15% of the world’s natural gas reserves, hydrocarbons make up 60% of GDP, 75% of state revenues and 95% of exports. The vast majority of these reserves are shipped in liquid form in specially equipped tankers. Qatari trade with the EU, for example, increased more than four-fold between the fourth quarter of 2007 and the last quarter of 2010, growing from a gross weight of 1.4m tonnes to 5m tonnes, according to Eurostat. These trade numbers make Qatar one of the EU’s top sources for maritime imports. As massive amounts of LNG and other petrochemicals are loaded onto ships departing from Qatar’s shores, freighters laden with imports are also arriving, filled with construction materials, consumer goods and other necessities. Steadily improving living standards have resulted in imports growth of some 41.4% between 2006 and 2010, as consumption increased. The successful bid for the 2022 FIFA World Cup has notched up growth estimates further. To process the surfeit of incoming ships, the state has a strategy that includes the construction of new ports in the medium and long term, as well as enhanced coordination among existing facilities in the short term.

MESAIEED: Qatar currently has three principal ports: Mesaieed Port south of the Doha, Ras Laffan Port north of Doha and Doha Port in the city itself. The port of Mesaieed, located about 40 km south of Doha in Mesaieed Industrial City (MIC) is one of the country’s most crucial shipping points. The port traces its history back to late 1949, when it was first used to export crude oil. In the decades following, the industry developed around the port in the area that is now MIC. Refining capacity grew to satisfy local demand for petrol. Later, other industries that use refining by-products as feedstock, such as petrochemicals and fertilisers, started to form. Finally, non-hydrocarbon products, including steel and aluminium, began to develop around the port. Today, MIC is home to the bulk of the state’s domestic industries, including Qatar Fertiliser Company, Qatar Fuel Additives Company, Qatar Petrochemical Company, Qatar Steel Company and Qatar Aluminium. To accommodate these industries, the port is equipped to handle a wide range of cargo, including containers, chemicals, oil, scrap metal, liquefied gases, and general, bulk and container cargoes. In 2010 the port handled more than 2100 vessels with a combined gross tonnage of nearly 2.75bn tonnes, according to latest available navigation data compiled by the QSA. In addition to its wide range of industrial cargo, in January 2012 Mesaieed handled its first commercial vessel. The shift is part of a broader plan to relieve congestion at Doha Port, where throughput has been edging closer to full capacity.

RAS LAFFAN: In the north-east of the country, atop the North Field natural gas reserve, sits Ras Laffan Port. Built in 1994, the port was originally 8.5 sq km. After a five-year reconstruction project that began in 2006, the facility has grown to its current size of 56 sq km. With seven operational LNG trains and six LNG berths, it is the largest LNG export facility in the world. Expansion of the port is continuing. By 2030, the target date for finishing port expansion and 26 km of breakwaters, Ras Laffan is poised to become the largest man-made harbour in the world. In addition to handling some of the highest volumes of oil and gas cargoes in the world, the port has also been growing into one of Qatar’s leading shipbuilding centres. Nakilat Damen Shipyards Qatar (NDSQ), a joint venture between the Nakilat and the Netherlands-based shipbuilder Damen, was launched in 2010. Its facility at Ras Laffan is currently capable of constructing steel and aluminium transport vessels up to 140 metres in length. In September 2012 the partnership launched its first ship, a load out/recover (LOR) barge with a capacity of 6500 tonnes, according to a company announcement. Key to the vessel’s construction was collaboration among NDSQ, its partner Nakilat-Keppel Offshore and Marine, and several local sub-contractors, including Milaha, Hertel Qatar, Muehlhan Dehan, International Paint Qatar and Qatar Welding and Fabrication. In recent years, the government has been working to encourage larger firms to partner with or sub-contract Qatari enterprises to build local expertise. The collaboration on NDSQ’s LOR barge exemplifies the shared benefits of such collaboration. The idea is to create a scenario in which the primary contractor can speed up production times by enlisting help, while smaller companies can gain experience by working with multinationals on larger projects.

DOHA PORT: Located in the southern section of Doha Bay, Doha Port is the primary conduit for Qatar’s commercial cargo. It opened in 1971 with four berths and has expanded in subsequent years to include nine quays, a container terminal, general cargo terminal, dhow jetty, and dedicated berths for the Qatar Flour Mills. As the Qatari economy continues to grow on the back of its highly profitable energy sector, demand for goods has been on the up. Livestock imports surged by 19%, vehicles rose 3% and total vessel arrivals increased by 5%, according to Qatar Ports “Doha Port Annual Statistical Report 2011”.

With depths ranging between 7 metres and 12 metres, however, the port is unable to handle large international cargo ships. Because its shallow depth range prevents the use of larger ships, increasing numbers of smaller ships call on the port, adding to costs and congestion. Moreover, the state’s successful bid to host the 2022 FIFA World Cup has added a significant upswing for incoming freight, especially construction materials and bulk cargo. As a result of these factors, the existing Doha Port is rapidly approaching its maximum throughput capacity, according to Qatar Ports, and solutions are in order.

AL RUWAIS: To alleviate pressure on the existing Doha Port and facilitate overall economic growth, the government is investing in major upgrades to port infrastructure. One area slated for an upgrade is the port at Al Ruwais. Work there began in early 2010 and is set to be complete by 2014, according to Qatar Ports. The port, which is designed to accommodate dhows, coastal trading vessels and ferries, is set to include a container berth and a general cargo berth containing dry and cold storage for fruits vegetables, livestock and other materials. Currently, marine works and dredging of the main channel are ongoing. Qatar Ports expects construction of the container and general cargo berths to be complete in 2012. Although not as large as other major infrastructure upgrades, upon completion Al Ruwais is set to play a significant role in the government’s broader goal of easing congestion pressures on existing infrastructure.

NEW PORT PROJECT: About 25 km south of Doha, adjacent to the Mesaieed Port, construction for the New Port Project (NPP) is currently under way. A decree signed on June 19, 2007 by Sheikh Hamad bin Khalifa Al Thani marked the beginning of the project. The heir apparent Sheikh Tamim bin Hamad Al Thani laid the foundation stone of the NPP in October 2011, marking the start of what is set to be one of the region’s largest seaports.

Originally set to cost QR27bn ($7.4bn), the project’s planners revised their estimates in June 2012 due to rising construction materials costs on global markets. The current estimated price tag for the NPP is about 10% higher, at QR30bn ($8.2bn).

The scale of the project cannot be understated. In order to construct the 26.5-sq-km port facility, including its 3.8-km long and 700-metre-wide basin, construction teams will need to excavate 63m cu metres of granular material, enough to fill 40,000 Olympic-sized swimming pools. Upon completion, the port facility will have three container terminals capable of handling 6m twenty-foot equivalent units (TEUs) per year. That makes the NPP’s capacity more than 18 times the cargo handling capacity at Doha Port, which handled a total of 321,158 TEUs of freight in 2011, according to statistics gathered by Qatar Ports.

In addition to handling a larger amount of cargo, the NPP will also accommodate larger ships. The existing Doha Port currently has berths that range from 7 to 12 metres deep, depending on the berth. To accommodate larger ships the approach channel at the NPP will be dredged to 15 metres deep and 300 metres wide, while the port’s basin will be dredged to 17 metres. For future expansion in phase 2, when the additional container terminal is due to be constructed, the access channel will also be deepened to 17 metres and the width will be increased to 500 metres.

The ships utilising the port’s sizeable facilities will not be limited to commercial vessels. The new seaport is set to be the future home of a base for the Qatar Emiri Naval Forces. Although the enormous build-up in capacity may appear Herculean, the NPP has laid out clear benchmarks to open the port in early 2016, according to the NPP’s steering committee. Moreover, the committee plans to approach maximum capacity gradually. Upon its initial opening, the port is set to have a capacity of 2m containers, steadily building up to the ultimate forecasted figure of 6m.

DIGGING DEEP: Progress is under way to meet these milestones. In January 2011 China Harbour and Engineering Company (CHEC) began excavations, and on March 13, 2011 CHEC’s QR3.25bn ($892.4m) contract with the NPP steering committee was formalised. Phase 1 includes the initial work for excavating the harbour basin and constructing the quay walls and inner breakwaters. The work is set to take just over 1600 days, according to the agreement. In March 2012 the NPP awarded a contract to dredge its approach channel to the Middle East Dredging Company, a firm jointly owned by the state of Qatar, Belgium-based Dredging, Environmental and Marine Engineering and Qatar-based United Development Company. The contract also includes the land reclamation basin dredging for the Naval Base. Work for the contract, which is worth a total of QR6.2bn ($1.7bn), started in March 2012 and is set to finish in early 2016. Tenders are being prepared and extended to subcontractors for consulting, engineering services and human resources, as well as port security. The authorities recognise that building a port is merely the first step in the larger process of integrating it with existing industrial and commercial supply lines. To facilitate a smooth transition as the NPP’s first stages come on-line, the project’s leadership has been forging ties with companies and organisations expected to use the port. In May 2012, the NPP held its inaugural Stakeholder’s Conference in Doha. At the half-day gathering, NPP authorities presented the port’s master plan, and stakeholders had the opportunity to ask questions about the project. Participants included both public sector organisations and private firms A LONG-TERM INVESTMENT: Through investments such as the NPP and Al Ruwais, as well as ongoing upgrades to areas like Ras Laffan, the government is forging ahead with its plans to increase overall sea cargo capacity and improve Qatar’s international trade connections. This should bode well for the economy as a whole, since in the lead up to the 2022 World Cup, incoming construction materials and consumer goods are only set to grow. However, the impact of improving port infrastructure will likely be visible long after the tournament as well. Virtually every segment of the state’s economy stands to gain from reduced congestion and faster imports, and a broad range of jobs are already being created for the construction, management and maintenance of new transport infrastructure. Indeed, even though port upgrades carry high price tags in the short term, the long-term benefits for the economy are likely to offset these costs.