Business in Saudi Arabia: The Boom City of Yanbu

Business in Saudi Arabia: The Boom City of Yanbu Last updated on Sunday 25th April 2010

Twenty years ago, all that could be seen at Yanbu was an insignificant Red Sea fishing port, surrounded by an arid coastal plain. Today, Yanbu Industrial City together with its port ranks as one of the exporting giants of the modern Kingdom of Saudi Arabia. The construction of this ultra-modern industrial base in such a short time must surely be counted as one of the Kingdom's most astonishing achievements.

Back in the 1960s, Saudi Arabia's vast petroleum deposits were still being largely extracted by foreign countries, thirty years on from the first discovery of oil. The dramatic rise in oil prices, however, which began in the early seventies, heralded a glowing social and economic future for the Kingdom. The dream to establish Saudi Arabia as a top worldwide industrial exporter could at last begin to take shape.

The first step was taken with a Royal Decree in 1975, which first established the Royal Commission for Jubail and Yanbu. In 1977, after two years of hard work, the Commission completed a 30-year Master Plan, which laid down guidelines for the conversion of a staggering 54,362 acres (22,000 hectares) of undeveloped desert land for residential and industrial use.

Four basic industrial categories were to be established. The first category, Primary Industries, incorporated all petroleum-based or energy-intensive industries. Secondary Industries included production industries using raw materials from the first category. Support Industries and Light Manufacturing Industries were categorized as those which produce materials or services needed by the first two categories.

The new Industrial City of Yanbu was planned as the spearhead for the modernization of the whole of Saudi Arabia's rural northwestern coastal region. It would also provide a new strategic outlet on Red Sea shipping lanes, to handle most of the Kingdom's sea-borne trade. Planners envisaged a city with housing and lifestyle facilities second to none, and an urban population, which would exceed 100,000 by the year 2020. The Royal Commission planned 14 neighbourhoods, or residential districts in the new city, which was to be known as "Yanbu Industrial City" (Madinat Yanbu Al-Sinaiyah).

After an initial injection of government money, the strategy was to provide incentives for increasing private investment. The Royal Commission sought to achieve this by the establishment of functioning primary and support industries, and by building an attractive residential environment for both management and workforce. The Commission's first priority was therefore to establish a physical infrastructure, capable of supplying the needs of this growing urban community.

Access was of paramount importance. This was aided considerably by Yanbu's location within easy connecting range of the new Jeddah-Madinah highway. Within the city itself, more than 261km/162 miles of new roads have been built, a figure which is growing year by year.

Energy was the next important concern. An ultra-modern, 92-megawatt power station was built, with power distribution by means of a network of ecologically friendly underground cables. Water services for irrigation, drinking and cooling -- especially vital in Yanbu's desert climate -- were efficiently provided by a vast desalination plant, which can produce 1,963,460 cubic feet/55,600 cubic meters of fresh water per day. The pumping system provides 14,125,600 cubic feet/400,000 cubic meters of sea-water per hour.

Water conservation has been carefully considered and irrigation water for landscaping use is provided from sanitary wastewater. Industrial wastewater is recycled and re-used in industry and for fire extinguishing.

A top requirement for modern international business is an efficient communications system, and again the Royal Commission surpassed itself. Direct dial fibre-optic and satellite relays carry telephone, telex and fax communications around the world, and a new cable TV station broadcasts programmes throughout the day. Over 12,000 telephone and four telex lines can handle 168 simultaneous users on a 'time share' system and by a mobile radio paging system. The Emergency Services Control Centre is computer-controlled.

The construction of the new port facilities at Yanbu probably ranks as the greatest single item in the city's amazing transformation. Until 1978, Yanbu's port contained only two berths of 33 feet/10 metres, with quay lengths of only 186 yards/170 metres and 230 yards/210 metres respectively. Today, the King Fahd port at Yanbu is one of the world's longest industrial ports, stretching for more than 9 miles/15km along the coast and containing seven major terminals with 25 berths. The Red Sea's biggest port, it is serviced by a fleet of 31 modern tugboats and can accommodate super tankers up to 500,000dwt.

Roll-on, roll-off ('ro-ro'), heavy lift, container and dry cargo berths in the general cargo and container terminal are serviced by three 40-ton container gantry cranes. A 118-foot/36 metre Control Tower regulates port traffic and there is ample warehouse stowage for containers and general cargo.

In July 1981, the first of the new city's primary heavy industries was ready to begin operations. This was ARAMCO's Crude Oil Terminal, the western reception point for the trans-Kingdom pipeline from Jubail. A second pipeline has now increased capacity from 1.8 million to 3 million barrels per day, and a direct pipeline from Iraq was opened in summer 1989, which was designed to deliver more than 2.5 million barrels of Iraq crude oil.

By 1988, eight heavy industries were operating in Yanbu, including the Yanbu Petroleum Refinery (YPR), which received international acclaim for its safety and efficiency record, and the Al-Lajeen Aluminium Smelting Plant, designed to produce 220,000 tons of aluminum per year. The latter is one of the Kingdom's largest privately owned ventures, with a paid-up capital of SR600 million.

Every effort has been made to give Yanbu's residents a comfortable lifestyle and attractive environment. Private business has now taken over from the original Royal Commission, and an estimated population of 113,000 is expected in ten years' time.

The city of Yanbu epitomizes practicality, efficiency and respect for tradition, and represents one of Saudi Arabia's supreme achievements.

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