Abu Dhabi National Oil Company and Mubadala Investment Company-owned Cepsa awarded Spanish engineering company Tecnicas Reunidas a contract to study the development of a planned petrochemicals project in Ruwais.
The Spanish contractor will execute front-end engineering and design on the project to produce linear alkyl benzene (LAB), a chemical compound that is used in industrial detergents, Adnoc said on Tuesday.
This development, the first to be advanced as part of the Dh165 billion downstream investment strategy Adnoc announced in May, will produce 225,000 metric tonnes annually of normal paraffin and 150,000 metric tonnes of LAB.
In an interview with The National in November, Cepsa chief executive Pedro Miro said the company valued the scheme at between $575 million and $625 million (Dh2.11bn – Dh2.29bn). The LAB plant in Abu Dhabi will be located in a derivatives park, which Adnoc said in its downstream strategy would act as a manufacturing hub on the back of products from the expanding refining and chemicals facilities in Ruwais.
"The park will act as a prime catalyst for the next stage of Adnoc's petrochemical transformation by inviting partners to invest and produce new products and solutions from the growing range of feedstocks that are available in Ruwais,” said Abdulla Al Messabi, business unit manager at Adnoc Refining & Petrochemicals.
Spanish energy company Cepsa, which held back its initial public offering at domestic exchanges, operates LAB plants in Spain, Canada and Brazil.
Cepsa, which is fully owned by Mubadala, plans to spend $500m in the next three years to develop its LAB business globally. Apart from its investment in Abu Dhabi, the Spanish company is in the process of upgrading some existing plants, on which it would spend the remainder of its capital expenditure.
"Our estimation for the LAB plant here is $575m and $625m, and since it’s a 50:50 joint venture, it will be $300m each way.
"We have a little bit less than $100m in Spain, $50m in Brazil and another $25m to $30m in Canada," Mr Miro said.
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"All of this gives us [a capex] of $500m for [the LAB business] in the next two and half to three years, keeping in mind we have a partner in Brazil, Petrobras, which is sharing 27 per cent and we have 73 per cent, so the total capex for the LAB plants Cepsa is involved in is higher," he added.
Meanwhile, Borouge, the UAE’s largest chemicals company, said on Tuesday it had begun construction of a fifth polypropylene unit at its third plant in the Ruwais facility. The scheme is set to boost polypropylene capacity by more than 25 per cent to 2.24 million tonnes per year.
In July, the chemicals company awarded Italy’s Marie Tecnimont the contract to build the polypropylene plant.
Polypropylene is a vital petchems product that is a basic in the plastics industry and has experienced increasing demand from consumer markets in Asia, notably India and China.
The new unit, known as PP5, is set to have a production capacity of 480,000 tonnes per year and will come on-stream in the third quarter of 2021.
With the addition of the latest unit, Borouge’s total production of polymers will increase by almost 11 per cent to reach 5 million tonnes per year.
