Growing demand is prompting the need to expand refining capacity

Given that Abu Dhabi’s economic development strategy puts an emphasis on building value in sectors in which the emirate already has clear competitive advantages, the downstream oil industry is an obvious focus for investment. The country’s biggest refinery has doubled its capacity after a $10bn programme that has brought in contractors from around the world. Despite rising international competition and narrowing margins thanks to a drop in the oil price, Abu Dhabi’s refining sector is well positioned. The energy sector has room for growth, especially in the downstream segment.

TAKREER: The emirate’s refining industry is driven by the Abu Dhabi Oil Refining Company (Takreer), an arm of the Abu Dhabi National Oil Company (ADNOC). Takreer was established in 1999 to take over ADNOC’s crude oil and condensate refining activities and the supply of petroleum products. The company is responsible for the development of refining activities in Abu Dhabi, and owns and operates the emirate’s two main refineries – Abu Dhabi Refinery and Ruwais refinery. Between them, these facilities produced more than 23m tonnes of refined products a year as of 2014.


The Abu Dhabi Refinery opened as the Umm Al Nar Refinery in 1976, the first in the emirate. It is the smaller of Takreer’s two plants, with processing capacity of 85,000 barrels per day (bpd) of crude oil. It produces liquefied petroleum gas (LPG), naphtha, aviation turbine kerosene, domestic kerosene, gas oil (diesel), straight run residue and liquid sulphur.

The Ruwais refinery Industrial Complex is located in Al Gharbia’s biggest industrial city, 240 km to the west of the capital. After plans were drawn up in the 1970s for a greenfield refinery development that would help catalyse the region’s growth, while also being closer to the emirate’s crude oil production, the plant was inaugurated in 1981. As of 2014, the design capacity at Ruwais was around 400,000 bpd, and the refinery produced LPG, unleaded gasoline (91, 95 and 98), naphtha, Jet-A1 (a kerosene aviation fuel), gas oil (10 parts per million, ppm) and fuel oil grades 180 and 380 CST. The Ruwais refinery has undergone several expansions. The first was in 1985 with the addition of a hydrocracking complex, and the following year the facility merged with a neighbouring utilities plant to ensure power and water supply. Between 2000 and 2002, two new condensate processing lines were commissioned. The development of the refinery has been driven by domestic demand, as well as the goal of maintaining ADNOC’s role in the international market for refined products.

Capacity Doubling

As of late 2014, Takreer was preparing to commission the largest expansion of the Ruwais refinery yet, which will more than double capacity to 817,000 bpd. In March 2010 Takreer signed contracts worth $9.6bn for the project with four South Korean companies, SK Engineering and Construction, GS Engineering & Construction; Samsung; and Daewoo. The expansion will enable the refinery to produce 1.1m tonnes of propylene a year in partnership with nearby petrochemicals producers in Ruwais’ industrial zone – propylene will be supplied to the adjacent Abu Dhabi Polymers Company (Borouge) Polyolefins Complex as a feedstock. Borouge has also been ramping up production to meet growing demand and is central to efforts to diversify and add value to the hydrocarbons sector (see Industry chapter). This is an example of the successful development of industrial clusters in Abu Dhabi’s economic zones, with suppliers and off-takers capitalising on synergies and economies of scale. “The expansion of Borouge was fully developed with the integration of Takreer,” Jasem Ali Al Sayegh, Takreer’s CEO, told OBG. “Integration with the petrochemicals industry will be critical to improve efficiencies.”

The refinery expansion includes new crude distillation and hydrotreatment units, and the world’s largest residue fluidised catalytic cracker (RFCC). As part of Takreer’s strategy to improve its profitability, the firm awarded a separate project, called the Carbon Black and Delayed Coker Project, to convert all heavy oil produced from both its existing and new refineries to produce specialty carbon black grades to meet Borouge requirements and anode calcined coke for aluminium smelters, as well as light petroleum products.


The range of contractors and subcontractors working on the project is also indicative of the opportunities for international companies to participate in Abu Dhabi’s downstream hydrocarbons sector as the emirate seeks to develop added value and diversify its exports. Takreer’s development is very much hand-in-hand with international partners that bring the latest technology, expertise and experience to its plants. In fact, Roberto Zanca, CEO of Emirates Ship Investment, told OBG that an anticipated increase in production, combined with more seamless delivery, should bode well for the tanker industry. Zanca said, “We anticipate growth opportunities for the tanker industry as the oil and gas sector in the UAE is poised for further expansion as it moves toward increasing its production, as well as increasing its manufacturing of downstream goods. This will require the seamless movement of oil products and chemicals both regionally and internationally, primarily to markets in Asia.”

The UK-based Foster Wheeler Company undertook the initial feasibility study (followed by the front-end engineering design activities that were carried out by Bechtel), before the engineering, procurement, construction and commissioning contracts were given to the four lead companies for four different parts of the project. SK Engineering undertook the crude oil distillation units; GS Engineering constructed the refining and RFCC units; Samsung constructed offsite and utilities construction; while Daewoo built tanks and connecting pipes. The latest refining technologies for the project were provided by Shaw Stone & Webster, which is owned by Technip; Honeywell subsidiary UOP; and CB&I. For the carbon black and delayed coker project the majority of the technology was provided by Italy’s Eurotecnica, with a host of renowned licensers, like Foster Wheeler, France’s Axens, Technip and UOP.


By bringing in the latest technology from global leaders, Takreer is not following fads or making unnecessary investments in luxuries. It is ensuring that it stays ahead of the game as one of the world’s leading refiners. “International oil companies are investing heavily to increase their output capacity of premium products, such as ULSD,” Al Sayegh told OBG. “Demand for ULSD is expected to rise sharply in the coming years, as countries all over the world are trying to reduce emissions from diesel engines. Authorities are placing a greater emphasis on environmentally sound products. Previously, ADNOC’s diesel had a minimum sulphur content of 500 ppm, but the company is now producing 10 ppm Euro V-grade diesel after completing the Green Diesel project in 2012, in line with UAE Cabinet regulations introduced in July 2014.”

Takreer is also diversifying its range to include more value-added products, including propylene, base oils and carbon black, as well as anode coke. While the new units will process Abu Dhabi’s Murban crude grade, Takreer has an ongoing study into switching to the Upper Zakum stream. The latter is somewhat heavier than Murban, which makes it cheaper to extract but more expensive to process. Murban is also higher-value – a switch would free up more of this premium grade to export. This is an issue that many refiners across the world are facing, as feedstock types change due to the depletion of some grades and increasing use of enhanced oil recovery to extract heavier crudes.

Competitive Market

Abu Dhabi’s strategy of developing value-added products and investing in Takreer’s capacity to produce them could prove to be prescient. The Ruwais refinery’s new units will come on-stream in an increasingly competitive global refining market in which margins are being squeezed. A considerable amount of capacity is being added in Abu Dhabi’s neighbouring countries – and those to which it exports refined products. “More refining capacity has been added at a global scale, led by developments in the Asia Pacific and Middle East,” said Al Sayegh.

As the International Energy Agency noted in its “World Energy Outlook 2014 , Europe in particular continues to have a large excess of refinery capacity, while “an increasing share of products is finding its way to market without passing through the refining sector at all”. The latter trend is being caused by increasing production of natural gas liquids through fractionation and coal-to-liquids and gas-to-liquids. The agency estimates that while total liquids demand will rise by 17m bpd between 2013 and 2040, demand for refined products will rise by only 10m bpd. In the same period, refining capacity is expected to grow by 16m bpd.

“Governments in different parts of the world continue to expand their existing refining capacity, which is already operating at very low or no returns, just in order to sustain employment and reduce their reliance on imported fuels,” said Al Sayegh. “Refineries must improve their efficiency by investing in technology, and increase the scale and complexity of their operations and diversity of products.” Takreer is doing just that, and the company’s management, service companies and contractors are all confident that it can continue to be a success story, despite international pressures.

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The Report: Abu Dhabi 2015

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