EDITORIAL COMMENT
Middle East buyer’s market requires swift action
Drydocks World Dubai will face a tough challenge from newcomers in Oman and Qatar.
B
ig changes are on the way in the Middle East shiprepair and conver- sion sector, with two major new
yards opening for business, in Oman and Qatar, in the coming months. Both will be capable of handling large tankers and LNG carriers and are backed by international groups in the shape of Daewoo and Keppel respectively. Tey are clearly solid ventures that are in it for the long term. Both yards also have a significant base load of work lined up from local state-backed shipping ventures and so have a good chance of achieving satisfactory levels of utilisation from an early stage. Te impact of two yards of such size
and capacity entering the regional market within a short period of time could be extremely negative and destabilising for existing operations such as Drydocks World Dubai and ASRY. Tese yards seem likely to lose some long-standing custom- ers and face a battle to keep others. Overall the Middle East seems certain
to become much more of a buyer’s market in the next six months, leading to further downward pressure on rates and the average revenue per vessel docked. Owners will be pleased by this development, but it will send shockwaves through the local repair community as there are many companies in Dubai and Bahrain which depend heavily on the health of Drydocks World and ASRY. Te arrival of the Oman Drydock and
the Nakilat-Keppel operations will certainly trigger strategic changes at Drydocks World Dubai and ASRY. Indeed to some
extent this is already happening, with ASRY investing in new facilities geared primarily to the needs of smaller craſt, and Drydocks World Dubai diversifying into newbuilding work. Drydocks World Dubai is also setting up its own facilities in the Dubai Maritime City (DMC) which will target small to medium sized vessels.
“Overall the Middle East seems certain to become much more of a buyer’s market in the next six months”
Part of DMC will be dedicated to
Drydocks World, but a large area will be allocated to companies who have a presence in Al Jadaf, which the govern- ment wants to close down and convert for use by leisure and tourism related activity. Over the past two years there has been painfully slow progress on this project, which envisages the relocation of all Jadaf companies eventually. However in recent weeks there have been some positive signs that momentum is at last gathering behind this initiative, with long term agreements being signed by Grandweld and Goltens to set up facilities on the DMC site. DMC represents an opportunity to
Shiprepair and Conversion Technology 4th Quarter 2010
breathe new life into the small to medium ship repair sector in Dubai and comes at the right time strategically, as the large vessel repair and conversion business will come under real pressure in the next few years. But, the authorities in Dubai need to act swiſtly if the uncertain pace of develop- ment at DMC is not to dilute the strength of the Jadaf offer. At least one Jadaf tenant, concerned by the slow progress at DMC and the closure threat hanging over Jadaf, has revealed that it is considering relocat- ing to another emirate within the United Arab Emirates (UAE) rather than DMC. Jadaf is a unique facility in the Middle
East with a wide range of services, directly and indirectly linked to shiprepair and conversion, situated together on one fairly compact site. But the location is not ideal, with vessels having to pass under bridges and along relatively shallow water to access the facility. Tis means that there is a strict limit on the size of ships that can be docked here. In many respects the Jadaf site is no longer
fit for purpose and the DMC concept was an acceptance of this reality. Unfortunately the delivery of this vision has been flawed, with tenants of Jadaf effectively being leſt in limbo for the past few years. Te opportunity to re-engineer the ship
repair and conversion business in Dubai needs to be taken now, or the moment could be lost. There are many other locations in the Middle East, and indeed within the UAE, that are lining up to step into Jadaf ’s shoes if the momentum behind DMC falters once again. SCRT
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