Yemen and Dubai’s DP World plan a major expansion of Aden’s container port, betting on growth in the poorest Arab country despite al Qaeda, instability and Somali pirates, officials said.

In 2008, Yemen formed a joint venture with the Dubai-based port operator to develop and operate the container port in the southern Yemeni city, strategically located on the southwest rim of the Arabian peninsula.

Thanks to its location on the Gulf of Aden and proximity to the Red Sea, Aden was one of the world’s biggest ports decades ago when steamers bound for the Suez Canal called in to refuel.

The advent of bigger ships meant fewer stops were required and Aden’s port diminished in importance.

Hit by global turmoil and piracy from neighbouring Somalia, 2009 container traffic fell by 39 percent to 265,459 twenty foot equivalent units (TEUs), a benchmark for transportation.

The number of ships calling fell to 315 last year from 438 in 2008, official data showed.

“Piracy… This is a very troubling issue,” said Mohamed Mubarak Bin Aefan, head of Aden port management.

The number of piracy attacks worldwide leapt almost 40 percent last year, with gunmen from the failed Horn of Africa state accounting for more than half the 406 reported incidents, according to the International Maritime Bureau.

Despite the slump, the port is now investing at least $270 million to widen and deepen the entry channel and add facilities to receive more and larger container ships, said Bin Aefan.

Aden hopes to develop the port as a hub for East Africa and the Gulf as the city lies on a shipping Europe-Asia route and is home to most of Yemen’s oil industry. In October, it started with France’s Total a $4.5 billion project to export Liquified Natural Gas (LNG) from south Yemen.

Last month Yemen said it was in talks with investors to upgrade its main oil refinery in Aden, hoping Gulf Arab producers might use it to lower dependance on the narrow Strait of Hormuz in the Gulf, the main oil shipping route.

Iran’s Revolutionary Guards have said Iran would impose controls on the Strait of Hormuz if attacked over a row with the West over Tehran’s nuclear plans, according to Iranian media.

Aden’s container capacity will rise by 500,000 TEUs to 950,000 TEUs within three or four months as eight kilometers of storage area would be added, the port head said.

Aden port also plans a tender for a dry docking and repair station, he said, without giving a value.

“This will give us the opportunity to receive more ships,” he said, adding that three to four container lines were now regularly calling at the port.

In the next stage of expansion, another 400 meters would be added to the container terminal within three years, said Adel Abdullah al-Sammak, DP World’s senior operations manger in Aden. He gave no value but Bin Aefan put it at $220 million.

“Aden has an excellent geographic position. Of course, the economic crisis has had an impact but this is not a specific Aden issue,” Sammak said.

Under a business plan, the number of berths might increase from two to five by 2025 with container traffic reaching 2.2 million TEUs by then, the official port newspaper said.

“The total quay length will reach 2,000 meters at Aden Container Terminal,” it said.

But DP World Aden advisor John Fewer cautioned expansion beyond the 400 meters would depend on “commercial requirements.”

He declined to give a forecast, saying only: “Yemen is growing. That’s why we are here.” (Reuters)