The Government of Abu Dhabi, through its International Petroleum Investment Company, will move ahead with the construction of a US$3 billion oil refinery in Fujairah.
Capital set to go ahead with $3bn refinery project
The Government of Abu Dhabi, through its International Petroleum Investment Company (Ipic), is to move ahead with the construction of a US$3 billion (Dh11.01bn) oil refinery in Fujairah.
Ipic said completion of the long-delayed project, scaled down to 200,000 barrels per day (bpd) of oil-processing capacity from the 500,000 bpd originally proposed, is slated for 2016.
"The Fujairah refinery project is a strategic initiative of the Government," the company said yesterday. "Ipic is giving this project high priority and importance."
The development is to be located near the export terminal of the recently completed Abu Dhabi Crude Oil Pipeline, which Ipic also developed.
The 1.5 million bpd capacity pipeline project was another strategic development for Abu Dhabi, allowing the emirate to transport about half of its crude output from the port of Fujairah on the Arabian Sea, bypassing the Gulf and its choke point at the Strait of Hormuz.
The refinery would give Abu Dhabi the option of exporting high-value refined oil products such as petrol and diesel from Fujairah in addition to crude, and could also provide bunker fuel to ships refuelling at the deepwater port. Fujairah is the world's second-largest bunkering port after Singapore.
The new refinery will be designed to process popular Abu Dhabi export grades of crude including Murban and Upper Zakum, as well as Dubai crude, Ipic said. A number of financing options for the project were under consideration, it added.
"This is an exciting opportunity to combine Ipic's financial strength and experience," said Khadem al Qubaisi, the managing director of the company, which is one of three sovereign wealth funds in Abu Dhabi charged with investing in oil and gas projects overseas.
Most of Ipic's asset portfolio consists of interests in foreign petroleum refining and petrochemicals ventures, with stakes varying from a few per cent to total ownership. But at the request of the Abu Dhabi Government it has also taken on certain strategic projects within the UAE.
The Fujairah refinery was proposed in 2006 as a joint venture between Ipic and the oil group ConocoPhillips. But the US firm pulled out of the project the following year after the estimated development cost rose sharply from the initial projection.
Last year, Ipic restarted feasibility studies for stalled refining and petrochemicals projects in Fujairah, Morocco and Oman. It awarded the Fujairah refinery feasibility study contract to the UK consultancy Wood Mackenziein July.
This month, Ipic awarded a contract for the front-end engineering and design phase of the project to the US engineering firm Shaw Stone and Webster.
The Fujairah refinery "will create social and economic benefits for Fujairah and [the] other Northern Emirates, as well as creating employment opportunities during the operational phase in the UAE," Mr al Qubaisi said.
The project is expected to create more than 750 permanent jobs, of which up to 400 would be taken by UAE nationals.