[THIS IS A SAMPLE ARTICLE FROM THE FEB 2012 ISSUE OF SHIPPING WORLD & SHIPBUILDER]
King Hamad’s vision to create an Islamic utopia by 2030 hinges on the commercial success of Bahrain’s maritime, offshore and logistics sectors
Despite the so called ‘February 14 Revolution’ in which some foreign correspondents incorrectly linked the riots in Bahrain last year to the wider popular insurrection that engulfed some Middle East states, King Hamad bin Isa Al Khalifa remains committed to advancing the political and social reforms he initiated in 1999.
Indeed, the largely biased reporting by western media, whose depiction of the unrest painted a picture of an oppressed majority beholden to the whim of an uncaring, authoritarian regime, is belied by the government’s ‘Economic Vision 2030’, which is intended to result in a society and government capable of embracing sustainability, competitiveness and fairness while adhering to the true Islamic principles of tolerance and multiculturalism. The strategy is to shift the country’s economy from one built on oil wealth to a productive, globally competitive economy ‘shaped by the government and driven by a pioneering private sector – an economy that raises a broad middle class of Bahrainis who enjoy good living standards through increased productivity and high-wage jobs’.
At the beginning of 2011 King Hamad announced a BD5bn two-year investment package intended to spur various social, political and economic reforms. He issued directives for BD1000 to be paid to each Bahraini Family; the building of 1000 houses to be distributed to the destitute and needy; the allocation of 1000 more free university places; and the building of two new cities to house new homes, new hospitals, new schools, new universities and new industrial hubs. An ambitious strategy to invest in vital oil and gas sectors was unveiled and Bahrain stepped up its oil exploration programme by drilling 25 new wells. The General Organisation of Sea Ports (GOP) launched a maritime education fund to provide scholarships to Bahraini nationals for pursuing further education overseas in maritime related fields. And there were even proposals to bid for the Olympics and the 2022 World Cup! Bold endeavours indeed.
This Islamic utopia, however, hinges to a large extent on a multi-pronged strategy to develop and expand of the country’s maritime, offshore and logistics sectors, as Shaikh Daij bin Salman Al Khalifa, the chairman of the General Organisation of Sea Ports (GOP) and the Arab Ship Repair Yard (ASRY), attested: ‘Bahrain’s economy has been growing rapidly and this reflects the Kingdom’s aspirations to become a globally competitive economy driven by the private sector. Bahrain is internationally recognised as the freest economy in the Middle East but our excellent business environment is not our only strength. A key component of Economic Vision 2030 is the creation of a world class infrastructure that fully links Bahrain to regional and global markets.’
This includes the 25km causeway to Saudi Arabia, which links the largest trillion dollar regional market to the doorsteps of companies operating in Bahrain. And once the proposed causeway between Bahrain and Qatar has completed the Kingdom of Bahrain will be only 30min away from one of the most gas rich nations in the world.
While there has been much conjecture as to when the planned $2.3bn causeway will actually be get off the ground, in January 2011 Bahrain's Foreign Minister stated that the project should be considered as a ‘must’ for both countries. An announcement was then made in April quoting an anonymous source in the Al Wasat newspaper that construction would be completed by 2015, at a cost of about $5bn. At the time of writing, construction had not started but given Bahrain’s keenness to build an $800M LNG terminal by 2014, the importance of the ‘Qatar Bahrain Friendship Bridge’ cannot be underestimated. It has been guesstimated that Bahrain will need about 1000scf of LNG a day if it is to meet its energy requirements.
It was, of course, the opening of the $360M Khalifa bin Salman Port (KBSP) in 2009, which kick-started the drive towards a more sustainable non-oil- based economy. This development (which resulted in the closure of Mina Salman, the Kingdom’s main port for fifty years), followed by the $280M Bahrain Logistics Zone in 2011, could see Bahrain realise its maritime ambitions of becoming the major trans-shipment hub for the northern Gulf. If not, it is certainly likely to engender an exodus of foreign businesses to the Kingdom.
Since operations began, efficiency at the APM Terminals-operated port has improved. The port’s current capacity is 1.1MTEU, although this is expected to be expanded to 2.5MTEU in a second phase development to start later this year. This will include new berths and increasing the depth of the approach channel to 15m, in order to accommodate the largest containerships and bulk carriers operating in the region’s waters.
‘Together, KBSP and the BLZ will enhance the maritime profile of the Kingdom, Shaikh Daij told Shipping World & Shipbuilder, adding that he intends to make ‘Bahrain the strategic gateway and trans-shipment hub for the northern gulf, including Saudi Arabia, while further strengthening ASRY’s role as major global player in onshore and offshore repair and other related shipping industry services’. The restructuring of Iraq, he says is expected to see more vessels visit both the port and the repair yard, although this is heavily dependent on the political situation in Iran and whether the Straits of Hormuz remain open to international trade. But that’s another story.
Like the amelioration of its port and logistics infrastructure, the recent expansion of the Arab Ship Repair Yard is symbolic of the Kingdom’s sustained development and expansion towards realising Economic Vision 2030. In December last year, ASRY inaugurated its new repair quay wall (see p 30, Oct 2011 edition), built as part of its on-going $188M expansion programme designed to enable the provision of speedier, more cost effective services to its customers. The 1.38m repair quay, located to the north of the existing yard, in an area known locally as the ASRY Basin, has a water depth of 12m and is capable of accommodating three 300 000dwt vessels simultaneously.
The next phase of the development programme will see the commissioning of a new 200 000m2 offshore fabrication area and heavy load out quay along with the entering into active service of four state-of-the-art shipyard tugs.
Since operations began in October 1977, ASRY’s original 500 000dwt capacity graving dock has been complemented by two floating docks capable of accommodating vessels up to 80 000dwt and 120 000dwt respectively, two of the largest slipways in the region and 15 repair berths, all backed-up by a comprehensive array of workshops and technical services.
ASRY has also moved on from being just a super tanker repairer to one capable of repairing anything that floats from naval vessels and rigs to containerships and OSVs, although VLCC and ULCCs still provide a large slice of the yard’s annual workload.
In recent years ASRY has diversified into the offshore oil and gas markets, especially for the repair of jack-up rigs, and into the technically demanding naval repair sector. It also entered into a Joint Venture agreement with British power generation company Centrax to develop floating power barges.
‘But this isn’t the end for ASRY – not by a long way. Once the shipping industry picks up and gathers momentum, as I’m confident it will, ASRY will be able to push forward with new plans and ventures, both at home and internationally, but only when the time is right!’ affirmed Shaikh Daij.
‘These developments will contribute significantly to the successful implementation of the Kingdom’s strategy, devised and implemented by the GOP, the relevant Authority of the Kingdom’s maritime sectors. This strategy is closely linked to Economic Vision 2030, which reflects the Kingdom’s efforts to achieve rapid economic development by positioning Bahrain as a global maritime and logistics centre.
He acknowledged, however, that ASRY has been through difficult times but that the cyclical nature of the industry lends itself to optimism, despite there being increased competition from new repair yards in the region and the Far East.
‘The competition has always been there so I don’t see it really as a threat. I see it as an opportunity for us to grow into a better, more efficient company and we will capitalise on the quality of services we provide. Vessels will always need to be repaired and there are over 40 000 vessels that will need to be retrofitted for ballast water treatment plants and other systems. That will be a big market for us.’
The evolution and diversification of ASRY into a major global player provides the Kingdom with a blueprint for success which, by 2030, should see the private sector across all industrial and commercial sectors driving economic growth in Bahrain independently.
According to the Economic Vision 2030 mission statement: ‘In a world where modern technology and new competitors from across the globe are constantly shortening product lifetimes, entrepreneurialism and innovation will ensure the sustainability of a vibrant private sector. But economic growth must never come at the expense of the environment and the long-term well-being of our people: no effort will be spared to protect our environment and preserve our cultural heritage.’
[THIS IS A SAMPLE ARTICLE FROM THE FEB 2012 ISSUE OF SHIPPING WORLD & SHIPBUILDER]