Argus Media Limited

10/07/2021 | News release | Distributed by Public on 10/07/2021 07:25

Adnoc drops plan for new 400,000 b/d refinery at Ruwais

Abu Dhabi's state-owned Adnoc confirmed today that it has dropped plans to build a new 400,000 b/d refinery at Ruwais, citing a changed economic outlook for the project.

"We continually review the technical, commercial and economic status of all projects throughout the different stages of project planning, development and operations," Adnoc said. "We regularly assess market conditions and global supply and demand considerations. This ensures Adnoc's economic resilience and the future-proofing of our business operations. As a result of our early feasibility and pre-feed [front-end engineering and design] studies, we have concluded that at this time a new refinery is not economically attractive."

This marks the second major change to Adnoc's downstream plans in recent years. The original plan was to build a 600,000 b/d greenfield refinery at Ruwais, and Adnoc awarded a pre-feed contract to UK-based engineering firm Wood Group for that project in February 2019. But after Italy's Eni and Austria's OMV acquired equity stakes in Adnoc's refining and trading business later that year, Adnoc scrapped the idea in favour of a smaller 400,000 b/d petrochemicals-focused refinery and a 200,000 b/d expansion and revamp of Ruwais' existing 817,000 b/d refining complex. The rationale behind reconfiguring the existing refinery is to enable Adnoc to better tailor its oil product output to market dynamics, while costing 50pc less than a newbuild refinery.

The target was to finish the 200,000 b/d expansion by 2024 and to complete the new 400,000 b/d refinery by 2026, boosting Abu Dhabi's total refining capacity by 60pc to 1.5mn b/d. While the new refinery has been put on hold, it might be revisited if economics improve. In the meantime, Adnoc is pushing ahead with the 200,000 b/d revamp and expansion, according to a source with knowledge of the project. This will leave Abu Dhabi with total refining capacity of just over 1.2mn b/d.

Adnoc is already in the middle of a $3.5bn crude flexibility project at Ruwais, which will allow the refinery to process around 400,000 b/d of heavier offshore crudes, freeing up more of the UAE's lighter, sweeter flagship Murban grade for export. With the project now more than 85pc complete, Ruwais will soon be able to refine the Upper Zakum crude grade - which is fed by offshore oil fields - for the first time. The refinery will also be able to process over 50 other regional and international grades starting next year.

Down the value chain

Despite moderating its growth plans for refining capacity, Adnoc said it remains committed to expanding its downstream operations at Ruwais. "We are fully committed to growth projects across our downstream and industrial portfolio, with a particular focus on gas and petrochemicals projects in Ruwais," the firm said. "We see exciting opportunities for additional growth and expansion across these businesses, in line with a robust market outlook for gas and petrochemicals."

Located in the western region of the UAE along the Mideast Gulf coast, the sprawling Ruwais industrial complex is the centerpiece of Abu Dhabi's ambition to deepen its footprint throughout the oil value chain. Along with the refinery, Ruwais also hosts the 4.5mn t/yr Borouge petrochemical plant, a joint venture between Adnoc and Austrian olefins and polyolefins producer Borealis. Adnoc's expansion plans include the addition of a fourth steam cracker at the Borouge plant to bolster the UAE's petrochemical exports. It also aims to grow its Ta'ziz joint venture, which is developing a derivatives park at Ruwais to produce a range of new chemical and fertilizer products.

By Adal Mirza