The Abu Dhabi National Oil Company (ADNOC) has announced that it is receiving considerable interest from potential partners, as it explores a range of new growth options and initiatives to accelerate the delivery of its recently announced downstream strategy.
The new downstream plans were outlined on Sunday 13th of May, at the ADNOC Downstream Investment Forum in Abu Dhabi. At the event, ADNOC detailed plans to invest AED 165 billion (US $45 billion), to become a global downstream leader, enabling it to further stretch the value of every barrel it produces to the benefit of ADNOC, its partners and the UAE, creating a range of opportunities for new and existing partners and investors.
The downstream strategy will build on the ADNOC transformation program of the last two years, which focuses on maximising value by driving operational efficiency, enhancing performance, realigning the management of its portfolio of assets, and introducing a new and expanded partnership and investment model.
Commenting after the forum, H.E. Dr Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO said, “As we grow in the downstream, a central pillar of our strategy will be the creation of a global refining and petrochemical growth engine at Ruwais. We are exploring a range of options in Ruwais, including bringing in partners who share our vision to develop new businesses that will accelerate the growth of the complex.
“The expansion and enhancement of our refining capabilities in Ruwais, along with the development of Derivatives and Conversion Parks, are key initiatives aimed at significantly expanding ADNOC’s downstream operations. They will provide the UAE private sector, and international companies, the opportunity to partner with us to build and profit from the extended petrochemical value chain. The entire plan will support the development and diversification of the UAE’s economy, create highly skilled, specialized jobs and contribute to GDP growth.”
ADNOC is now accelerating this transformation by executing its downstream strategy that is aligned with ADNOC’s 2030 strategy of a more profitable upstream, more valuable downstream, more sustainable and economic gas supply, and more proactive, adaptive marketing and trading. ADNOC will look to create long term downstream partnerships, providing access to opportunities across the value chain for both investors and partners.
Bob Dudley, CEO of BP, who was in attendance at the Downstream Investment Forum, commented on ADNOC’s partnership model and the investment opportunities it provides, saying “Abu Dhabi for us is a strategic partner, it’s a great place to invest... the UAE has great resources to produce, and it exports those, but now it can take them and add more value to every barrel of crude oil and natural gas it produces, turning them into other products, and sending them to the markets. This seems like a natural fit because Abu Dhabi is located at the cross roads of the world, and it’s a really ambitious idea that Abu Dhabi has experience of executing.”
Also commenting at the event, John Flint, Group CEO of HSBC paid tribute to the impact of the program and the prospects of the UAE, saying “ADNOC's transformation is capturing the attention of investors around the world. The UAE is a good place to invest now because it has economic ambition coupled with dynamic and clear leadership.”
Also commenting at the Downstream Investment Forum, on his experience with ADNOC, Mark Garrett, CEO of Borealis, the Austria headquartered partner of ADNOC in their joint venture Borouge, said “When we invest, we look for long term advantaged feedstock supply, ability to access markets, ability to leverage our technologies and the ability to fund. In regards to ADNOC and Abu Dhabi, we found these things.”
Central to the plan will be a major enhancement and expansion of refining, petrochemicals and manufacturing operations and capabilities in Ruwais, UAE. The plans will build on the existing strengths and competitive advantages of the Ruwais Industrial Complex, through a combined program of strategic partnerships and investment, and will see ADNOC increase the range and volume of high-value downstream products to meet rising global demand. An enhancement of refining capacity and capabilities will enable the creation of a manufacturing ecosystem in Ruwais in the form of Derivatives and Conversion Parks that will further stimulate In-Country Value creation, private sector growth and employment in the UAE. The plans will see crude oil refining capacity doubled, and petrochemicals production tripled by 2025. In addition, the plans will see the creation of more than 15,000 highly skilled, specialized jobs in the petrochemicals and refining fields added by 2025, along with a contribution of an additional 1% to GDP per year.
With a refining capacity of 922,000 barrels per day (bpd) of crude and condensate, ADNOC’s operations in Ruwais already make it the fourth largest refining complex globally, representing 10% of refining capacity in the Middle East. ADNOC aims to increase and enhance the processing capacity and capabilities of the Ruwais refinery and petrochemicals complex through a range of new initiatives and investments, including:
• A new refinery – a greenfield project to build a 600,000 barrel per day crude refinery.
• A Crude Flexibility Project (CFP) - a new refinery upgrade to allow ADNOC to process heavier crudes. Developing this capability will allow ADNOC to export more of its high-value Murban, as well as further support its new asset-backed trading activities.
• A Gasoline Aromatics Project (GAP) - the development of new processing units to upgrade the company’s light and heavy naphtha streams, which would allow ADNOC to increase its gasoline production and allow the development of another vertical in the ADNOC petrochemical value chain through the development of aromatics, leading to further downstream business and investment activities within the new Ruwais Derivatives and Conversion Parks, and the potential export to growth markets.
• A new Linear Alkyl Benzene (LAB) project – the LAB manufacturing facility will be fully integrated within the ADNOC Refining complex, taking feedstocks of kerosene and benzene to produce the most common raw material in the manufacture of biodegradable household and industrial detergents and a number of other products.
• A mixed feed cracker – ADNOC and Borealis are constructing the Borouge 4 complex, which moved to the Front End Engineering Design (FEED) stage in July 2017, and will encompass a world-scale, mixed feedstock cracker, that will be fully integrated with ADNOC’s Ruwais refineries.
• An additional polypropylene plant – also in July 2017, it was announced that the new polypropylene plant (PP5) had moved into the engineering, procurement and construction (EPC) tendering phase. The plant will be based on Borealis' proprietary Borstar technology, and will be integrated with the existing Borouge 3 complex.
• Carbon Black and Delayed Coker – an upgrade to improve product recoverability and maximise value from the bottom of the barrel.
Further to the above refining projects, the Ruwais Derivatives Park will enable partners to invest alongside ADNOC in assets that produce new primary chemical products from a broader range of feedstocks made available from the expanded Ruwais Refinery and the new Mixed Feed Cracker.
Beyond the Derivatives Park, the Ruwais Conversion Park will enable new businesses even further down the value chain, taking feedstock from ADNOC Refining, Borouge and the Derivatives Park, to manufacture higher value, converted end products, including packaging materials, coatings, high voltage insulation, pipes and automotive composites. In addition to supplying valuable feedstocks, ADNOC will also avail developed land, infrastructure, utilities and shared services at attractive rates to the potential tenants.