A ground-breaking move for Arabian Gulf region

In a ground-breaking move, Abu Dhabi and Fujairah announced their intent to set up a harbour that allows exporting 70 per cent of Abu Dhabi's oil exports through Fujairah, without passing through the Strait of Hormuz.

The move sounds extremely important due to its strategic, economic and environmental dimensions - not only for the UAE but also for the entire Arabian Gulf region.

Over the past three decades, Gulf navigation faced turbulent conditions and threats, which reached its peak in the mid-1980s when oil carriers were attacked during the so-called "war" on oil tankers.

Among today's threats is that the Strait of Hormuz is the first target of conflicting parties due to its strategic importance. Over 70 per cent of Gulf oil exports and 80 per cent of GCC commodity exports, especially food, pass through the Strait.

Hence, the continuous reliance on this waterway sounds very dangerous.

The UAE's interest in setting up the Fujairah harbour marks a new turn that will definitely change the current equation and this semi-full dependence on the Strait of Hormuz.

Apart from the significant strategic and security aspects which guarantee the flow of oil supplies, the export of oil through Fujairah will lead to cuts on oil shipping costs and save time on unloading and shipping.

It is known that the passing of oil tankers and other commercial ships through the Gulf will add more costs to carrier companies due to an increase in insurance prices to cover the dangers taken into consideration by the insurance companies.

Therefore, oil exports via Fujairah will also help save huge amounts of money per year due to a decline in insurance costs.

Also, the setting up of the Fujairah harbour is expected to yield fruitful economic results through the construction of an oil refinery with a capacity of half a million barrels per day.

Among these results is offering thousands of job opportunities to UAE citizens in the Eastern Region. This would contribute towards developing Emirati human resources and improving their standards of living.

Furthermore, the environmental aspect of this step is no less important. The Gulf is a semi-closed water body and is considered one of the most polluted seas in the world due to the large number of oil carriers and ships that pass through it every day.

Consequently, the step will contribute towards preserving environment as it stands as a valuable service when hundreds of oil carriers will stop passing through the Gulf. This will result in reducing the remnants of oil carriers and ships in the Gulf waters.

After the success achieved in the field of infrastructure in the past three decades, the UAE is now starting a new and bold experiment in the area of energy, similar to the pioneering Dolphin project.

The move has coincided with the announcement by Kuwait and Qatar to start shipping liquified Qatari gas to Kuwait after the project to transport Qatar gas through the setting up underwater pipelines failed. This obviously means that the cost of gas transport from Qatar to Kuwait will largely increase because this will go through two stages. The first is liquifying gas in Qatar and then retransforming it to a gaseous state in Kuwait.

The second is the high cost of transporting liquified gas compared with transporting gas through pipelines.

Since the reasons and problems that hindered the Qatari-Kuwaiti gas pipelines project have been solved, they should benefit from the UAE's experience and reconsider this project to set up gas pipelines between Kuwait and Qatar that would pass through other GCC countries.

This will involve setting up gas pipeline networks for all GCC countries, similar to the landmark Dolphin project. All GCC countries are in urgent need of this not only to generate electricity, but also to be an example of joint venture GCC projects that aim to diversify sources of income.

The setting up of such a gas pipeline network will yield major positive results at strategic, economic and environmental levels.

The writer is a UAE economic expert.