The rapid growth of Abu Dhabi’s air transport and maritime shipping industries over the course of the past decade has had a knock-on effect on the production and trading of jet and bunker fuel in both the emirate and the UAE as a whole. A number of major local players – including the Abu Dhabi National Oil Company’s (ADNOC’s) distribution arm, ADNOC Distribution, and the Abu Dhabi Oil Refining Company (TAKREER) – have ramped up production and distribution of both types of fuels in recent years, in an effort to cater to steadily increasing demand from domestic and regional airlines and shipping companies.
Onward & Upward
The rise in demand for aviation fuel in Abu Dhabi can be directly linked to the expansion of Etihad Airways. Since its establishment in 2003, the emirate’s flag carrier has rapidly become one of the largest airlines in the Middle East, driven in large part by demand for flights that link Western markets, such as the US and Europe, with major East Asian destinations, such as Singapore, Tokyo and Hong Kong. The government’s deep pockets have allowed Etihad Airways to add new planes to its fleet at a rapid pace. Most recently, at the Dubai Airshow in November 2013, Etihad placed a $25.2bn order for 56 new Boeing planes. This deal was only the latest in a string of major orders placed by the carrier over the past five years (see Transport chapter). In conjunction with the similarly swift rise of Emirates, based in Dubai, over the past decade, Etihad Airway’s expansion has had a major impact on jet fuel consumption in the UAE.
In 2012 – the most recent year for which data was available at time of publication – the country consumed some 95,000 barrels per day (bpd) of jet fuel, up from 84,000 bpd in 2011, 81,000 bpd in 2010 and just 43,060 bpd in 2000, according to data from the Kuwait-based Organisation of Arab Petroleum Exporting Countries (OAPEC). The UAE has been the single largest consumer of jet fuel on an annual basis among OAPEC’s 10 member nations since the mid-2000s. In 2012 the country was the largest jet fuel market in the Middle East by a factor of nearly one-third, with Saudi Arabia, the next largest market, consuming 67,650 bpd over the course of the year, according to OAPEC data.
ADNOC Distribution supplies aviation fuels and related services to many of the UAE’s largest airports, including Abu Dhabi International Airport, Bateen Executive Airport and Al Ain International Airport in Abu Dhabi, as well as airports in Sharjah, Fujairah and Ras Al Khaimah. Additionally, the firm operates refuelling facilities at Dubai’s Al Maktoum International Airport.
ADNOC Distribution also exports jet fuel and a wide variety of other related products from TAKREER’s refinery near the Port of Ruwais, which is located around 240 km west of Abu Dhabi City. TAKREER, which is a wholly owned subsidiary of ADNOC, is responsible for refining Abu Dhabi’s jet fuel and supplying it to ADNOC Distribution. The company is currently in the midst of a $10bn refinery upgrade programme at its facilities in Ruwais. When the project is completed, TAKREER is widely expected to be able to boost the amount of jet fuel it produces every year.
The BIOjet Abu Dhabi (BIO jet) project could also eventually have a major impact on the jet fuel market in the UAE and the Gulf region as a whole.
The projects is a joint venture between Boeing and Etihad Airways, which includes cooperation with TAKREER, French oil major Total, and Abu Dhabi-based Masdar Institute of Science and Technology, with a focus on developing a fully functioning jet biofuel supply chain in Abu Dhabi. Launched at the seventh annual World Future Energy Summit, which was hosted by Masdar in Abu Dhabi in January 2014, the initiative’s stakeholders have jointly invested in research and development (R&D) activities, particularly in the areas of feedstock production and refining capabilities. At the launch event, Etihad Airways carried out a 45-minute demonstration flight of a Boeing 777 aircraft that was powered in part by biofuel that was developed under the BIO jet project. The fuel originated as plant matter, which was then partially converted by Total before being refined into jet fuel at a TAKREER research centre. The BIO jet initiative is linked to the Sustainable Bioenergy Research Consortium (SBRC), an R&D group hosted by Masdar that includes Etihad Airways and Boeing as founding partners. Both the SBRC and BIOjet are working to develop salt-tolerant plants to serve as the raw material for aviation biofuels. If the project moves forward as expected, Etihad Airways could potentially power commercial flights with biofuel by 2018.
Alternative Fuel Sources
The BIO jet project is in line with Abu Dhabi’s growing reputation as a centre for biofuel development in the Middle East. So far most of this activity has been aimed at transforming the automobile and public transport segments.
As of the end of 2013, for example, the government was in the midst of a large-scale, long-term project to convert the emirate’s public bus and taxi fleet to run on compressed natural gas (CNG), which burns cleaner than both petrol and diesel. Similarly, in recent years ADNOC Distribution has begun to install CNG distribution points at a handful of filling stations throughout the emirate, in an effort to enable residents to take advantage of CNG technology, which is 35-40% more fuel efficient than petrol. “We are witnessing today a shift towards CNG in government transport fleets,” Abdullah Salem Al Dhaheri, the CEO of ADNOC Distribution, told OBG. “ADNOC Distribution has taken on the responsibility of distributing natural gas, starting from the design and production to the management, operation and maintenance of the distribution network and its associated systems across the industrial, commercial, residential and transport sectors.”
Over the past decade the emirate of Fujairah has become a major centre for ship refuelling in the Middle East. Fujairah’s status as the sole emirate located outside of the Strait of Hormuz has made it a key destination for major energy-related investments in recent years. According to CE Delft, a non-profit environmental consultancy based in the Netherlands, Fujairah is one of four global bunker fuel trading hubs – with the other three being Houston, Rotterdam and Singapore. Traders in Fujairah supply an estimated 24m tonnes of bunker fuel on an annual basis, according to data released by the Port of Fujairah in 2012.
While most of the UAE’s bunker fuel trading activity takes place in Fujairah, Abu Dhabi’s ports are well equipped to provide bunkering services to ships of all sizes. ADNOC Distribution is a major provider of bunkering services at the emirate’s primary deep-water harbour, Khalifa Port, which opened for business in 2012. Abu Dhabi is also a major supporter of and key investor in Fujairah’s energy infrastructure. The government is expected to begin construction work on the Abu Dhabi Crude Oil Pipeline, for example, in the near future. The project, which aims to reduce the emirate’s reliance on oil shipments travelling through the narrow Strait of Hormuz, involves the construction of a 380-km overland pipeline that will allow the emirate to export crude directly from the port at Fujairah to international markets. The project, which is expected to have a capacity of 1.5m bpd, is scheduled to be completed in 2016.
You have reached the limit of premium articles you can view for free.
Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.
If you have already purchased this Report or have a website subscription, please login to continue.