Abu Dhabi's IPIC eyes new Oman, UAE refineries

Investment firm may spend $6.5bn on two oil refineries in Duqm and Fujairah
oil rig, oil field, oil, energy, GCC energy, GCC oil, black gold
By Bloomberg
Wed 19 Oct 2011 07:03 PM

International
Petroleum Investment Company (IPIC) may spend $6.5bn on two oil refineries to
be built in the UAE and Oman, according to documents
released by the Abu Dhabi government-owned company.

The
investment firm may spend $3.5bn to build a 200,000 barrel-a-day
oil refinery at Fujairah on the UAE’s east coast, a bond prospectus
posted on the London Stock Exchange website on Wednesday showed.

That’s an
increase from the $3bn the company said it would spend on the
project in a similar bond document released in March.

IPIC, as the
investor is known, may also go ahead with 230,000 barrel-a-day refinery
at Duqm in Oman, according to the document. That facility may cost $6bn with the investment split evenly between IPIC and Oman Oil Co,
the government-run energy company in the neighbouring Sultanate.

Middle
Eastern oil producers are investing in domestic refinery projects to
meet local demand as well as evaluating export facilities that will
allow them to ship fuels to growing markets in Asia.

Refining crude into
fuels like gasoline, diesel and jet fuel allows oil producers like the
UAE and Oman to benefit from the higher value those products can
fetch on international markets.

IPIC is also
building a $4bn pipeline to transport 1.5m barrels of oil
daily from Abu Dhabi’s main onshore fields to Fujairah. The pipeline is
expected to deliver its first oil in early 2012, according to the
prospectus.

The Abu
Dhabi Crude Oil Pipeline, as the project is known, will allow ships to
avoid transiting the Strait of Hormuz, the chokepoint for entry into the
Gulf. The port at Fujairah can also host larger ships than
those that can dock at Abu Dhabi’s main oil loading port of Ruwais
within the Gulf.

Middle East
oil-producing countries will add 5m barrels a day of refining
capacity by 2018 as they seek to meet fuel demand, Deutsche Bank said
in a note on Wednesday.

The additions will account for 20 percent of the
global growth in fuel-processing capacity and will boost Middle East
refining capabilities by 60 percent, Soozhana Choi, an analyst at
Deutsche Bank, said.

Both the
Fujairah and the Oman refinery projects are in the engineering and
design phase. The plant in Fujairah, which will be reached by a pipeline
IPIC is also building to transport Abu Dhabi crude, is set for
completion in mid-2016, according to the bond prospectus.

The Duqm
facility, which will be designed to use UAE and Omani crudes, would
be completed in 2016 or 2017, if built, the document showed.

Oman Oil and
IPIC announced a plan to study the Duqm project in Oct. 2009 without
providing details on the size or cost of the facility.

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