x Abu Dhabi, UAEWednesday 26 July 2017

Dubai recruits partners to build second oil refinery

China Sonangol, which also drills for oil with Chinese state-owned Sinopec and mines for diamonds in Angola, is to lead a consortium to design, finance and build the refinery

Dubai has recruited partners from Hong Kong and Angola to build its second oil refinery as it seeks to become more self-sufficient in fuel.

Sheikh Ahmed bin Saeed, the chairman of the Dubai Supreme Council of Energy, signed an initial agreement with Sam Pai, chairman of China Sonangol Group, a joint venture between Angola’s state oil producer and a private Hong Kong company.

The refinery could process products for domestic use and international markets, the Dubai Government said yesterday, without specifying the project’s scale, cost or feedstock source.

“Fitted out with advanced technology, the refinery will seek to ensure the sustained supply of refined-end products for the emirate’s future energy consumption while further augmenting Dubai’s export portfolio,” said the Dubai Government.

Noor Investment Group of Dubai is to serve as the financial adviser for the Supreme Energy Council, the emirate’s top energy policy body.

The choice of China Sonangol shows how Dubai is being drawn into the complex network of commercial ties between China and Africa based on energy extraction and infrastructure building.

China Sonangol is 30 per cent owned by Sonangol and 70 per cent owned by New Bright International, a 10-year-old private Hong Kong company. Although not officially affiliated with the Chinese government, China Sonangol has a partnership in Angola with Sinopec, one of China’s three major national oil companies. The company’s operations include drilling for oil, mining for diamonds, developing property in Manhattan and Singapore, and chartering aircraft in China and Africa.

In Dubai, it is to lead a consortium to design, finance and build the refinery.

Dubai’s existing refinery at Jebel Ali is operated by Emirates National Oil Company and can process 120,000 barrels per day.

The UAE has three other refineries: one in Sharjah, one in Abu Dhabi and one in Ruwais that is being upgraded at a cost of US$10 billion. The upgrade, set to more than double the refinery’s capacity to 900,000 barrels per day, will make the UAE self-sufficient in petrol production, according to Abu Dhabi National Oil Company (Adnoc).

Adnoc has taken over increasing numbers of petrol stations in the UAE after Dubai and federal fuel companies struggled to maintain supplies amid rising oil prices. The UAE government sets a price for petrol that, although the highest among GCC countries, remains far below international prices.

This month Adnoc completed the takeover of 75 petrol stations from Emarat, the federal retailer.

In spite of high oil prices, refinery construction around the world has been on the upswing, including a major refinery in Saudi Arabia. Aramco selected engineering and construction contractors last October for the refinery and terminal in Jazan.

ayee@thenational.ae