Feasibility study will identify target projects and opportunities available for prospective investors and partners
Abu Dhabi National Oil Co. formed a venture with a state holding company to boost investment in petrochemical projects, part of the emirate’s drive to expand beyond raw crude into more valuable products.
Adnoc and its partner, ADQ, agreed to invest in and manage downstream activities at the planned Ruwais Derivatives Park, they said in a statement. They will complete a feasibility study this year.
The partners, both based in Abu Dhabi, capital of the United Arab Emirates, didn’t disclose financial details of the deal. Adnoc will hold 60% of the venture, with ADQ owning the rest.
Adnoc, like other Middle Eastern crude suppliers, faces an uncertain outlook for oil demand. Brent crude is down 33% this year to around $44 a barrel, hammered by the coronavirus and a gradual shift toward renewable sources of energy.
Two years ago the state company outlined some $45 billion of investments in refining and chemical production. Ruwais, on the Gulf coast 140 miles (225 kilometers) west of Abu Dhabi city, is already the site of Adnoc’s biggest refinery and chemical and manufacturing plants.
ADQ, formerly known as Abu Dhabi Development Holding Co, has assets ranging from power generation to logistics.
The venture is part of Adnoc’s “unwavering focus on stretching the margin of every barrel of oil produced,” Chief Executive Officer Sultan Al Jaber said in the statement. It will “kickstart the development of the UAE’s downstream derivatives sector, support the transformation of Ruwais into a global hub for industry and attract additional foreign direct investment.”
The International Energy Agency forecasts that chemicals will be one of the fastest-growing segments of oil demand. Abu Dhabi and other petrostates are looking to turn their hydrocarbons into plastics and components for consumer goods like cars, mobile phones and computers.