The industrial cities of Jubail and Yanbu, conceived by a Royal Commission 31 years ago, laid the foundations for economic diversification with the recognition that the Kingdom needed to move away from its reliance on oil and enter the international markets with industrial products.
The Jubail and Yanbu Industrial Cities have since proved a resounding success. They have established a range of support industries and infrastructure, encouraged investment in primary and secondary industries, attracted international joint venture companies from America, Europe and Asia and provided jobs for Saudi nationals. Jubail has just been named the Middle East city with the best economic potential by the leading business publication, Financial Times Business’ Foreign Direct Investment fDi Magazine.
This success has prompted the government to begin work on the Jubail Industrial City II (Jubail II). Custodian of the Two Holy Mosques King Abdullah late last year laid the foundation stone of Jubail II which is expected to draw in investments totaling SR224 billion. The commitment in infrastructure alone for Jubail II, which will double the size of the existing industrial zone, will be nearly SR14.25 billion ($3.8 billion). The whole project is expected to create some 55,000 new jobs.
The new industrial city is situated about three kilometers to the west of the existing city. It will be developed in four stages. The Royal Commission will provide all the infrastructure, including roads, utilities, gas, electricity, sea water cooling, potable water, waste water treatment, feed-stock and a product pipeline corridor to King Fahd Industrial Port. The port is also being expanded. Work on extending the utilities from the existing park across Saudi Aramco’s 1.5 km wide Kuwait Ras Tanura (KRT) corridor will start shortly. Bechtel is managing and supervising the projects on behalf of the Royal Commission.
Jubail II is expected to have primary industries similar to the existing industrial center. Development of the infrastructure is expected to be complete by 2007 and the first industry may start production by 2009. The designs for the infrastructure, including tunnels, superstructures, pipelines and transport routes to the port, were completed last year. The subsequent phases of the Jubail II project will be developed progressively as the demand for new sites increases.
Jubail II is aimed at capitalizing on the country’s abundant hydrocarbon resources, to optimize economic and social benefits for the Kingdom and to further strengthen an already globally competitive petrochemical industry. Supporting Saudi Arabia’s national development strategy, the new development is projected to double the size of the Jubail Industrial City by 6,200 hectares.
Jubail II’s initial nine plants will cover 1,900 hectares of the total 6,200 hectare development. Bechtel, which handled the original Jubail development, has been asked to manage Jubail II.
The project team is sticking to the original master plan, building the infrastructure on land that was set aside 30 years ago. Residential areas will be added within the existing community to accommodate up to 50,000 new residents by 2024.
The biggest technical challenge facing the construction of Jubail II will be in accommodating Saudi Aramco’s KRT corridor, the main north-south pipeline for oil and gas.
The open canal method for cooling process water that worked so well for Jubail I cannot be utilized for Jubail II, due to limitations posed by the new site’s elevation, explains a spokesman for Bechtel. The solution calls for a network of four-meter-diameter pipelines with an initial flow of 200,000 cubic meters per hour.
The Royal Commission has taken a giant leap in terms of its capabilities since the foundation of Jubail I in the 1970s. The technology transfer program overseen successfully by Bechtel in Jubail I has helped develop an experienced project management organization of 283 people. Hence, development in Jubail II will be largely managed and built by local resources.
Dr. Abdul Wahab Al-Saadoun, head of the energy sector at the Saudi Arabian General Investment Authority (SAGIA), said earlier this year: “Throughout the past three decades, the two cities of Jubail and Yanbu have not only succeeded in building and maintaining a modern infrastructure but more importantly, have gained a worldwide reputation for developing and implementing environmental and safety standards, that have become a global benchmark for industrial estates.”
The investment environment in Saudi Arabia continues to strengthen. SAGIA is working with its sister ministries to drive closer conformity with international best practice. The new foreign investment legislation now gives considerable legal comfort to overseas investors.
The Royal Commission’s investment and development unit has improved its service to new industries with a “One Stop Shop” system. This provides continuous support to investors, in both industrial and residential projects, helping them to find information, documents, application forms and answers to all their inquiries.
Meanwhile, the Royal Commission for Jubail and Yanbu is constructing housing facilities in the Jalmudah area for the future executives and workers of Jubail II. The first part of the four-stage residential development plan is now in full swing. A total of 11,600 residential units, which will occupy some 933 hectares, are planned for construction in Jalmudah. The Jalmudah residential complex will have the most modern facilities, including commercial, recreational, health and security facilities. Stage One of the residential complex will see the construction of 2,300 units of housing — villas and apartments. Stages Two through Four are now being designed and will add an additional 10,000 houses and apartments. In all, this project due to be finished in 2010 will house 50,000 people.
The existing Jubail Industrial City currently has about 17,000 residential units, served by about 1,000 “commercial facilities,” three hospitals and six clinics. Two colleges, one technical institute and 68 schools and kindergartens provide the education and training to the city’s burgeoning population.
Jubail Industrial City has a daytime population of 143,500. The nighttime population is about 94,500, indicating that many people still commute to work in the industrial city. The Royal Commission has spent roughly SR22 billion to build residential and commercial projects at the original Jubail Industrial City.
Work on the industrial city began in 1977 at the then small fishing village of Jubail. The entire infrastructure had to be developed or imported in huge, pre-assembled modules. The result was primary industries covering 80 square kilometers, secondary and support industries covering 16 square kilometers, a major harbor and port facility, including a 20-berth commercial pier, a national airport, public service utilities (water treatment, domestic and industrial sewage collection and treatment, and power distribution), sea water cooling facilities, roads and highways and telecommunications systems. All these elements came together to make a self-sufficient, full-service residential community, including housing, schools, a hospital, clinics and mosques and one of the world’s most advanced industrial training centers.
Jubail took project management to a new level. At its peak, the work force constructing it reached 50,000. The city has to date attracted massive foreign investments totaling $46 billion, capturing almost 50 percent of the country’s total investment. Jubail is already the world’s largest converter of natural gas resources to value-added petrochemicals, representing a six to seven percent share of the world market. The city is now home to 17 major, primary industrial (natural-resource-based) facilities and approximately 150 secondary, support and light manufacturing operations.
Jubail’s rise to world prominence continues with numerous joint ventures being established in the city, joining existing major capital investment projects. There are almost 30 plants under construction in Jubail, another two undergoing major expansion and 44 more on the drawing board.
The Royal Commission has skillfully guided Jubail I toward sustainable economic development and has launched Jubail II with the same in-depth planning and incentives for investors that made Jubail I such a success.
Another dramatic recent development has been in the city’s use of technology. The Royal Commission recently completed an information technology expansion that brought broadband Internet access to virtually every building in Jubail. Jubail II will be high speed from the beginning.
Jubail’s strategic importance will be increased once the planned 1,065 km railway line linking the city with Jeddah via Dammam and Riyadh has been completed. There will also be a further rail link to the mineral-rich north to bring raw materials to the industrial city.
