International Petroleum Investment Co of Abu Dhabi plans to complete construction of a 200,000 barrel-a-day oil refinery at Fujairah on the east coast of the UAE by the end of 2016.
The refinery is set to cost about $3bn, according to an IPIC bond prospectus published on the website of the London Stock Exchange. The board of the state-run investment company approved the decision to go ahead with the project on January 25, according to the prospectus dated March 4.
IPIC has hired advisers to conduct preliminary design and engineering work on the proposed project and aims to hire a project management consultant to lead the development this month, it said. The company is considering project financing and other funding options.
The proposed Fujairah refinery would be near the outlet of a 1.5 million-barrel-a-day oil pipeline running to the coast and set to be completed this year. The pipeline will give access for exports to the Gulf of Oman, allowing shipments to bypass the Strait of Hormuz, the waterway connecting the Persian Gulf and the Indian Ocean and is the transit point for tankers hauling oil from producers including Saudi Arabia, Qatar, Iraq and Kuwait.
The refinery will be able to process UAE crudes and will give the emirate the option to export its hydrocarbons as crude or refined products, which can fetch higher prices on international markets.
Middle Eastern oil producers are investing in or evaluating refinery projects capable of serving markets in Asia, where fuel demand is set to grow. State-run Abu Dhabi Oil Refinery Co is doubling capacity at its Ruwais plant and agreed today to store crude oil at tanks in South Korea.
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