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Sun 21 Nov 2010 12:00 AM

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Expansion time

The United Arab Emirates is undertaking a swathe of multibillion dollar downstream expansion projects that will see the country punch right into the refining and petrochemicals big leagues.

Expansion time
Takreer is revamping its refining capacity to 417,000 barrels per day by 2013.

Despite holding the world’s fifth largest proven oil and gas
reserves and the fourth-highest oil production in the Middle
East, the downstream sector in the UAE is still underdeveloped compared
to neighbouring countries. However, current expansion projects are expected to put
the UAE firmly on the map of major regional players.

The vast majority of the hydrocarbon reserve is located in the
emirate of Abu Dhabi.

With regards to the refining sector, the UAE has three operating
refineries, Ruwais and Um al-Nar operated by Abu Dhabi National Oil Company (ADNOC)
subsidiary’s Takreer, and the third one is located in Jebel Ali free zone in Dubai
and is operated by Emirates National Oil Company (ENOC).

The emirates of Sharjah and Fujairah
also have refineries, each with a potential capacity of 80,000 barrels per day (bpd),
but they have never been operational due to financial and technical problems.

Abu Dhabi’s
refining segment was established in the 1970s. In 1999, ADNOC decided to restructure
the oil and gas sector and to delegate responsibility for different parts of the
energy sector to subsidiaries to ensure transparency and greater efficiency. This was the reason for the creation of Takreer
in 1999, which took over the runing of two refineries operated by ADNOC in Abu Dhabi. One is a small,
hydro-skimming refinery complex at Umm Al Nar on the outskirts of Abu Dhabi that operates at
85,000-90,000 bpd and does not engage in conversion.

The second refinery is located in Ruwais. It operates at roughly
400,000 bpd. “Putting these together, our total refining capacity is up to 490,000
bpd,” says Jasem Ali Al Sayegh, general manager, Abu Dhabi Oil Refining Company
(Takreer). The company is undergoing an expansion project to increase its refining
capacity of crude oil to 417,000 bpd and nearly double its production of transportation
fuels, gasoline, jet fuel and diesel by 2013. To this end, Takreer awarded five
engineering, procurement and construction (EPC)packages last year, but only signed
the contracts on the 1st of March 2010.

Essentially the new refinery facilities will process 417,000
bbl/day of on-shore Murban crude oil. Bottom of the barrel upgrading will be through
a 127,000 bbl/day Atmospheric Residue Cracker, the world’s largest under design
and selected to maximise propylene yields for downstream petrochemical projects.
The total cost of the entire project is US$9.6bn, and has been financed by ADNOC. “The expansion project is expected to be
completed sometime in 2013, and the facility should be fully operational by the
second quarter of 2014,” said Al Sayegh. “The awarding of this project came at the
right time, given the economic downturn and the fall in the price of commodities
and construction services, which have allowed us to reduce our original costs by
25-30%,” Al Sayegh explains.

In addition to Takreer in Abu Dhabi,
ENOC is running a refinery in Dubai.
It began commissioning units at the plant in December 2009 after completing the
$850 million overhaul. The project’s initial budget was around $500 million, but
Jebel Ali, like many other energy projects worldwide, suffered cost inflation when
oil shot up
to a record high of $147 a barrel in 2008.

“Sequential commissioning was completed in April this year. The
refinery is of 120,000 bbls/day capacity,” Enoc Group’s chief executive Saeed Khoory
says. The upgrade allows Enoc to convert naphtha to reformate, and gives it capacity
to produce 40,000 bpd of the gasoline component. The upgrade has added a reformer
and a hydrotreater to the plant. It would also produce sweet naphtha with a sulphur
content of 5 parts per million (ppm) and a high paraffin content. While Takreer
receives feedstock from its parent company ADNOC, ENOC imports the feedstock it
processes.

“The refinery is designed to process 100% Qatar condensate and 100% Arabian Super
Light,” says
Guruswamy Raghunathan, refinery general manager at ENOC Processing Company. “To
date, the refinery has processed condensates/light crude oil either as neat or in
admixture including South Pars and Margham,” he adds.The increase of the refining
capacity of Takreer comes in accordance with the 2030 economic vision that the government
of Abu Dhabi has set to diversify its economy out of oil dependency, where ADNOC
oil and gas production feeds into government refining and petrochemicals companies,
which in turn directly supply different specialist plastics and chemicals producers
in industrial zones linked to export hubs.

Petrochemicals

Abu Dhabi’s
vision for the petrochemical sector is to grow a world-class, global, integrated
petrochemical base by means of a mixture of targeted acquisitions and organic growth.
In this regard, Abu Dhabi has launched Abu Dhabi National Chemicals Company (ChemaWEyaat),
a company which targets the utilisation of LPG and naphtha, in contrast of Ruwais
Fertilizer Company (Fertil) which is focusing on natural gas-derived products and
Abu Dhabi Polymers Company (Borouge) which is based on ethane feedstock.

“We are trying to develop the world’s largest integrated petrochemicals
complex,” says Ali al-Dhaheri, project co-ordination manager at ChemaWEyaat. “Our
goal is to grow our business and to become one of the region’s top chemicals companies,”
he added.

Nine years ago, Borouge
started production at its 600,000 tonnes per year (t/y) ethylene and 450,000 t/y
polyethylene complex in Ruwais. The company is currently tripling its polyolefins
manufacturing capacity to 2 million t/y by the end 2010 and an additional 2.5 million
t/y is scheduled for 2013. “We are continuing with the process of starting up the
Borouge 2 operations at Ruwais and it is going well according to plan. All units at the plant are already operational,”
Borouge’s official spokesman told RPME.

The completion of Borouge 3 will raise the total production capacity
of the company to 4.5 million t/y of polyolefins by the end
of 2013.

Both companies will feed into Abu Dhabi Polymers
Park, a plastic conversion
industrial park for international plastics producers. The idea of the polymers park
seems to not be progressing well, as it was planned to start last year, but to date,
things have not progressed as desired.

Fertil, the fertiliser arm of ADNOC has also embarked on a wave
of expansions. It is currently tripling its capacity from 650,000 t/y to 2 million
t/y.

“The project is slated for completion during the first quarter
2013,” says Mohamed Al Rashid, Fertil’s general manager. The new single ammonia
plant will have a capacity of 2,000 tonnes per day (t/d), and the single urea plant
will have a capacity
of 3,500 t/d. “The total capacity of the fertiliser complex will increase to 3,300
t/d
of ammonia and 5,800 t/d of urea,” Al
Rashid adds.

The backbone of the petrochemical industry in Abu Dhabi is the International Petroleum Investment Company
(IPIC), which is responsible for all foreign investments in the oil and chemicals
sector for Abu Dhabi.
It is supervised by the Supreme Petroleum Council of Abu Dhabi which oversees the
UAEs’ oil and gas operations and related industries. IPIC also controls.

Global ambitions

The backbone of Abu
Dhabi’s international ambition for the petrochemicals industry
is the International Petroleum Investment Company (IPIC), which
is responsible for all foreign investments in the oil and chemicals sector for Abu Dhabi. It is supervised
by the Supreme Petroleum Council of Abu Dhabi which oversees the UAE’s oil and gas
operations and related industries. It also controls 40% of ChemaWEyat.

IPIC controls major stakes in different international companies,
like Borealis which has licensing technology for products like polypropylene and
polyethylene. IPIC also acquired Canadian petrochemicals producer Nova Chemicals
in July 2009 for $2.3 billion, and completed the purchse of a 70% controlling stake
in the German industrial services firm Man Ferrostaal for about $950 million in
March 2009.

These purchases are strategic acquisitions for the UAE petrochemicals
industry. Man Ferrostaal has technology and experience in
the construction of petrochemical plants, while Nova has the technology for the
production of the low density polyethylene (LDPE).

Abu Dhabi
has invested huge sums in developing an intelligent portofolio of downstream assests,
both home-grown and from abroad. The gulf state is certainly well on its way to
cementing its position at the top of the global refining and petrochemicals industry.

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