Inside Fujairah
A gateway for energy and commodities in the Middle East
From modest beginnings when the first container terminal was opened in 1983, the Port of Fujairah has grown over the last 40 years to become the world's third-largest global bunkering hub after Singapore and Rotterdam.
The only multi-purpose port on the eastern seaboard of the UAE, the Port of Fujairah now offers oil storage and trading, aggregate bulking and export, and ship supplies and services. Connected to oil production in OPEC's third-largest producer by a 240-mile pipeline from Abu Dhabi, the core Fujairah Oil Industry Zone flanks the Port of Fujairah on the north and west with about 13 million square meters of land and is still growing.
FOIZ now encompasses crude and refined products storage, bunkering, and refining. Key to Fujairah's growth is its strategic location outside the 22-mile wide Strait of Hormuz, which makes it an ideal stop off point for vessels entering the Gulf but also provides open access to trade routes linking the Arabian Peninsula to India and major energy export markets in East Asia. Bunkering sales at the port hit a record high in October 2021 and 8.2 million mt annually in the first year the port has publicly reported volume.
Gulf gateways
Container and bunkering ports in the Gulf have grown off the back of the region's oil-fueled economic boom, which has gained pace since the 1970s. The region's ports from and Fujairah in the UAE through to and in Oman have all grown in size and importance along with the critical role played by the Gulf in global energy supply and an important trading bridge East of Suez.
The is arguably the world's most important shipping chokepoint. The channel, which separates the Arabian peninsula with Iran is used to ship about a third of the world's seaborne crude and petroleum liquids. However, since the so called 'Tanker War' of the 1980s the area has attracted higher insurance premiums for shipping and added to global price volatility.
During the Iran-Iraq war, tankers and freight vessels began to use the safer waters off the coast of Fujairah as an anchorage and as a bunkering point. The yearly number of vessels now docking at the port has reached more than 4,800. Over the last decade oil throughput has more than tripled to over 135 million mt in 2023.
Fujairah also connects to major ports in the Indian Ocean and furtherafield into Asia, making it part of the trade flows along China's strategically important so called 'belt and road'. Ports in India with close links include -- which is India's largest container terminal processing more than half the sea freight passing in and out of the subcontinent -- , with its natural deepwater harbour serving the world's largest democracy and Asia's third-largest economy.
Unique position
The , which has capacity to deliver 1.5 million b/d of Murban crude from Abu Dhabi to an ADNOC terminal outside the port is also significant for Fujairah's growth strategy. The pipeline allows oil to circumvent the Strait of in case of disruptions. The strait is arguably the world’s most important chokepoint, used to ship roughly almost a fifth of oil globally.
Fujairah’s evolution has helped support the growth of the UAE, which could produce 3.5 million b/d and aims to raise output to 5 million b/d by 2030. It currently pumps close to 3 million b/d. Meanwhile, the port has the capability to handle more than two-thirds of UAE’s exports of Murban grade crude, which is predominantly shipped to markets in Asia.
UAE’s primary crude grades are the onshore and the offshore . These come from the main oil fields, which include Umm Shaif, Bu Hasa, Upper Zakum, Lower Zakum, Habshan, Fateh, South-West Fateh, Rashid, Falah and Jalilah.
A has been commissioned in 2024 linking industrial sites in Dubai and Abu Dhabi emirate with Fujairah.
The UAE’s infrastructure continues to support its robust growth. Its main refinery is the 817,000 b/d , where a $3.5 billion crude flexibility project has been set to be completed in 2023. When fully operational, nearly half of Ruwais’ capacity will be able to process crudes other than Murban. There is also a 210,000 b/d refinery in .
Fujairah also plays a key role in supporting economic growth in the UAE -- the Gulf's second-largest economy after Saudi Arabia -- which underpins its diversification into dry-bulk and other commodities. On the 1 st of March 2024 the Port of Fujairah commenced a state-of-the-art bulk handling terminal in for mainly limestone, aggregate, and clinker export, focusing on the Indian Subcontinent markets.
Oil stocks gauge
Fujairah stock levels have become an oil market barometer and product inventory data is published weekly by S&P Global Commodity Insights. These inventories have not only become an indicator of demand for fuel oil and gasoline in the Arabian Peninsula but also Africa and increasingly Asia.
Broken down, exports of individual products such as naphtha give an indication of petrochemicals demand in Asia, while gasoline shipments provide a sign of broader economic growth.
The weekly inventories are also becoming an important indicator for shipping fuel demand in Fujairah, which has risen to rank as the world’s third largest bunkering hub after Rotterdam and Singapore. Platts has been assessing spot market values for Middle East refined products on an FOB Fujairah basis since October 2016 while it has been reporting weekly oil product inventories since January 2017.
S&P Global Commodity Insights began reporting bunker sales volumes in 2021 and there are now 12 licensed bunker suppliers, including Petrochina, Minerva and, one of the newest entrants, Montfort Trading.
Bunker fuel sales at Fujairah totaled 7.5 million cubic meters in 2023, with International Maritime Organization-compliant grades comprising 70.5% of total sales, according to Fujairah Oil Industry Zone data. Sales can be influenced by everything from power utilities in Asia seeking more HSFO cargoes to the volatility of crude oil markets globally.
The Fujairah Offshore Anchorage Area offers up to 133 anchor positions and services such as bunkering, lube oil, LNG, LPG and marine services for calling vessels including navy ships holding valid diplomatic clearance. Close to 11,500 vessels called at the anchorage in 2023, according to the port.
Growth anchor
Fujairah’s development is allowing it to become an all-round trade hub. The UAE's AD Ports Group has started deliveries on its Fujairah Terminals expansion to offer container, general cargo and cruise operations at the port, adding container capacity of 720,000 twenty-foot equivalent units and general cargo capacity of 1.3 million mt.
Fujairah oil storage capacity has grown exponentially from 3.2 million cu m in 2011 to almost 18 million cu m in 2023, equivalent to over 113 million barrels -- which includes the underground caverns in the mountains to stash 42 million barrels of crude oil. It also plans to expand downstream operations including close to 5 million cu m of additional storage capacity, a fourth refinery as well as two new oil berths at the Port.
Total crude and product volumes handled at the port exceeded 135 million mt in 2023, up from around 110 million mt in 2019, as oil stocks halved amid a pick-up in demand, especially in Asia, and constrained OPEC-related supply. At the heart of Fujairah's infrastructure are the Port’s unique matrix manifold systems, which provide storage operators with full connectivity to any of the Port’s oil berths at FOTT 1 and FOTT 2. Additionally, this system caters for transferring products directly between storage operators without having to charter a vessel. This is a huge advance for oil traders, allowing them direct trades within the vast Fujairah storage network.
The list of storage operators at the port is also growing, and has attracted traders including Aramco Trading Co., Vitol, ADNOC Trading, TotalEnergies T&S and Montfort. Ecomar Energy Solutions has joined Vitol and Fort Energy in having a refining operation and total refining capacity in Fujairah stands at 185,000 b/d.
UAE rail expansion will add 605 km of line from Ghuweifat on the border with Saudi Arabia to Fujairah. The volume of goods transported on the network is set to increase from 7 million mt/year to more than 50 million mt/year, according to Etihad Rail. BPGIC is working on a third expansion of its storage facilities at Fujairah that could potentially add up to 3.5 million cu m of capacity. The phase III expansion project also includes a 25,000 b/d modular refinery and a larger 180,000 b/d conventional refinery.
Benchmarks
Fujairah bunker and fuel trade flows have relevance to multiple product assessments published by S&P Global Commodity Insights, as seen to the right. With deep financial markets available for hedging using and the following year Dubai and Oman assessments moved from New York to Singapore.
The five deliverable grades into Platts Dubai are Dubai, Qatar’s Al Shaheen, Oman and the UAE’s Murban and Upper Zakum. The quality premium for Murban was introduced in June 2016. Murban is a light sweet crude that accounts for around half of UAE crude production. Murban volume up to 2018 was the destination-free amount Platts Dubai as a settlement, Dubai’s influence as the world’s leading reference price for all medium, sour crude oil has grown through the years.
The Platts Dubai/Oman crude benchmarks started in 1984 when Platts began assessing the Dubai crude daily in New York. Oman was added as an alternative delivery grade in November 2001 and now destination restrictions are removed. The Abu Dhabi-based ICE Futures Abu Dhabi, or IFAD, was created in March 2021 to trade Murban futures contracts. IFAD Murban futures contracts are physically delivered on an FOB Fujairah basis.