Fujairah port is the world's third busiest bunkering port. Image Credit: Gulf News archive

Fujairah: Asia Power Co, partly owned by International Power Plc of Britain and Japan's Marubeni Corp plans later this year to open a $2.8 billion (Dh10.29 billion) power plant in the UAE that will supply the world's third-largest port for refuelling ships.

The 2,000-megaWatt F2 plant in Fujairah on the country's eastern coast will use natural gas from Dolphin Energy, an Abu Dhabi state-controlled venture that started transporting gas in 2007 from neighbouring Qatar to the UAE and Oman.

"The entire plant is in commissioning and should be commercial before the end of the year," Steve Yarrington, executive managing director of Fujairah Asia, said in an August 15 phone interview from Abu Dhabi. The F2 station will be able to burn either gas or fuel oil. "The intention is to run the plant on gas an extremely high percentage of the time," he said.

Demand for power is on the rise in Fujairah. The port is already a regional hub for refined products and bunker fuel, the main fuel for use in commercial ships. Only Singapore and Rotterdam are busier as bunkering ports.

Fujairah will soon become an export terminal for crude oil as well. Abu Dhabi, the country's capital, holds about 7 per cent of the world's oil reserves and is building a 1.5 million barrel-a-day pipeline to export more than half of its crude via Fujairah, starting next year.

The oil pipeline will enable tankers to bypass the Strait of Hormuz connecting the Arabian Gulf and the Gulf of Oman. As much as 17 million barrels of crude a day passed through the strait in the first half of 2008, equal to 40 per cent of all seaborne-traded oil, according to the US Energy Information Administration, part of the Energy Department. The strait, located between Oman and Iran, is 34km wide at its narrowest point.

Energy use

Energy use in the Middle East overall may rise by 60 per cent over the next 20 years, according to the Paris-based International Energy Agency. Kuwait began importing liquefied natural gas, or LNG, from suppliers such as Royal Dutch Shell Plc in 2009. Saudi Arabia, the world's biggest oil producer, has invited foreign companies including Shell and Lukoil OAO of Russia to help it explore for gas.

The F2 plant in Fujairah will be the largest in the UAE, where power demand is likely to double to 40,000 megaWatts by 2020, Minister of State for Foreign Affairs Dr Anwar Mohammad Gargash said last year.

Dolphin's $418 million gas pipeline extension to Fujairah from the town of Taweelah in Abu Dhabi will reach full capacity by December, the venture said in an emailed response to questions. The pipeline will be able to supply 350 million cubic feet a day of gas, enough for F2 and another plant already in operation in Fujairah called F1, Dolphin said.

Dolphin has contracted to take 2 billion cubic feet of gas a day from Qatar Petroleum. It receives the gas through an undersea pipeline and sends the bulk of it to Abu Dhabi Water and Electricity Co, Dubai Supply Authority and Oman Oil Co.