It is hard to believe that a country with more than 212 trillion cubic feet (tcf) of gas reserves relies on exports to meet its soaring domestic demand. But this is the reality in the UAE, which holds the fifth largest gas reserve in the world.
This is because the majority of its reserves are difficult and expensive to produce safely, due to the high sulphur content. The list of major gas producers in the world also includes Qatar, KSA and Iran. “Even with this gas reserve, the UAE is importing 2-2.3 bcfd (billion cubic feet per day) from Qatar, which is projected to reach 5 bcfd by 2015,” said Khaled Al Awadi, gas operation manager at Emarat.
To meet the increasing demand, the UAE is taking steps to increase gas supplies. “ADNOC is increasing its investments with international oil companies to explore and develop the gas reserves,” said Al Awadi. He added that Dolphin Energy and Sharjah Petroleum could also supply more to the UAE’s hungry gas market.
While Sharjah Petroleum may contribute 2% of supply, imports from Iran (should they reach an agreement) through the Crescent Petroleum-owned natural gas pipeline would supply 3% of the total demand by 2025, which is set to reach 227 149 mmscfd (million standard cubic feet per day) mainly for power and domestic use. “Dubai will add 5% of the total supply,” Al Awadi noted.
However, with any given scenario of gas supply, the UAE will still face shortages. “We should also work on securing alternative fuels and efficiency values,” explained Al Awadi. “Nuclear for peaceful power generation is one solution that the UAE should invest in, along with solar supply,” Al Awadi said.
Another alternative, said Al Awadi, is the utilisation of coal instead of gas. “In the North Emirates, some cement companies have already started using coal instead of gas, where more than 100 mmscfd gas-fired kilns were converted. Coal is easy to store, handle and transport,” he explained.
The shortage of ethane gas and the competition from other industrial sectors has led the UAE, mainly Abu Dhabi, to look for other alternatives to develop its downstream sector. Among the alternatives is the use of naphtha as feedstock, in addition to the integration of refineries with petrochemical complex.
“For Borouge 1, Abu Dhabi Gas Industries (Gasco) provides us with 750 000 tonnes of ethane per year,” says Faisal al-Shemsi, senior vice president, Borouge 3.
“For Borouge 3, it provided 1.8 m tonnes of ethane gas, while for the Borouge 3 expansion, we use 1.8 million tonnes of ethane and 1.1 million tonne of propylene from Abu Dhabi Oil Refining Company (Takreer),” he adds.
Borouge is currently undertaking its third expansion, which will increase its total production to 4.5 million tonne by 2013. “Borouge 3 will have an ethane cracker with a capacity of 1.5 tonne per year of ethylene, in addition to 1.08 million tone of polyethyelen, 350 000 tonne of LDPE and 480,000 tonne per year of polypropylene,” adds.
In addition, with Borouge aiming to be one of the major regional and global players in the polyolefins business, the company is establishing an innovation centre, which will employ more than 50 international researchers and engineers.
Borouge’s Innovation Centre is set to start operation at the end of 2011 and will focus on innovations for compounding as well as innovative plastics solutions for the pipe, automotive and advanced packaging industries. “Our $70 million Innovation Centre is on track to start up at the end of 2011,” says Hu Wei, vice president of the pipe business at Borouge.
We started the process of hiring talented people from all across the world,” he adds.As the downstream sector is considered the backbone of Abu Dhabi’s 2030 vision to diversify its economy, Abu Dhabi has in recent years launched a series of green field and brown field projects.
Takreer, the refining arm of Abu Dhabi National Oil Company (ADNOC), is expanding its refining capacity to reach 417,000 bpd in addition to integrating the refining to produce petrochemical products mainly the polypropylene.
“Our development strategy at Takreer includes a portfolio of initiatives including business improvement, new projects and portfolio as well as unit integration,” says Fareed Mohamed al Jaberi, strategic studies and business development manager at Takreer.
Takreer is also modernising existing units and adding new ones, to meet the future low-sulphur diesel requirements and produce a high quality product (diesel) for a better environment. “This will be through the implementation of a cost-effective approach which includes the selection of the right technology, configuration and catalyst,” he explains.
The new expansion will also allow Takreer to produce carbon black. The carbon black and delayed coker project will utilise the UOP Unionfining technology to upgrade distillate-range petroleum fractions to produce ultra-low-sulfur diesel.
In addition to the expansion of Takreer refinery and the third expansion of Borouge, Abu Dhabi has also launched a mega integrated petrochemical project, Abu Dhabi National Chemicals Company (ChemaWEyaat), a joint venture led by Abu Dhabi Investment Council (ADIC) and International Petroleum Investment co (IPIC), which plans to use naphtha from the Takreer refinery at Ruwais for its first phase of projects, called Tacaamol.
ChemaWEyaat plans to execute its $20 billion project on three phases. The first phase includes the Madeenat ChemaWEyaat Al Gharbia (MCAG) and the Tacaamol Aromatics.
“Khalifa Port and ChemaWEyaat agreed it would be better to put all the plants in one location, said a spokesman from the Abu Dhabi Ports Co. “We both agree to have one petrochemicals complex in one area and the recommendation was to have it closer to the source of feedstock. This is the best option for Abu Dhabi and we are delighted about the land allocation to Chemaweyaat next to the Ruwais complex, the source of feedstock.”
ChemaWEyaat has awarded the UK’s Halcrow Group with the Master Plan Consultancy Services Contract for the MCAG chemicals industrial city, which will be located in the western region of Abu Dhabi.
In addition, ChemaWEyaat has also awarded the project management consulting (PMC) contract to Australia’s WorleyParsons for the Tacaamol Aromatics Project (TAP).
On the top of that, Abu Dhabi looked into the possibility of setting up a polymers conversion park, attracting polymer products from Saudi Arabia and surrounding countries, but this project seems to be stuck with no developments since 2009.
In contrast to Abu Dhabi Polymers Park, the polymer conversion parks in Saudi Arabia have progressed very well, and recent official announcements revealed that more than 80% of these parks are occupied by convertors from within and outside the Kingdom.
Though the majority of downstream projects are in Abu Dhabi, International Petroleum Investment Company (IPIC), the investment arm of the government of Abu Dhabi, announced that they are proceeding with the implementation of a 200 000 bbls/day Refinery at Fujairah, at an estimated cost of $3 billion.
The Project Management Consultancy (PMC) contract for the front end engineering and design (FEED) phase of the Fujairah Refinery has been awarded to Shaw Stone & Webster in April 2011.
The project is currently in its pre-front end engineering and design phase (Pre-FEED), with project completion anticipated to occur by mid 2016. IPIC is giving this project high priority and importance.
To help implementing these projects, IPIC controls major stakes in different international companies, like Borealis which has licensing technology for products like polypropylene and polyethylene.
IPIC also acquired Canadian petrochemicals producer Nova Chemicals in July 2009 for $2.3 billion, and completed the purchse of a 70% controlling stake in the German industrial services firm Man Ferrostaal for about $950 million in March 2009.Together, these purchases are strategic acquisitions for the UAE petrochemicals industry.
Man Ferrostaal has technology and experience in the construction of petrochemical plants, while Nova has the technology for the production of the low density polyethylene (LDPE).
Recently, IPIC acquired Spanish refiner Compania Espanola de Petroleos “Cepsa”, an acquisition that will help the wholly-owned Abu Dhabi government fund to be well positioned in the European market.
In addition, many western firms are setting-up manufacturing facilities in the UAE to serve local downstream clients. The Rosemount division of Emerson which manufactures instrumentation to measure pressure, temperature, level and flow, has expanded its facility in the UAE to provide more local service support.
Emerson also produces and services Rosemount pressure transmitters for the region in its Dubai Measurement Manufacturing Centre (DMMC), demonstrating the importance of the UAE market for service providers.
As in any part of the world, doing business in the UAE has its own challenges that companies need to face. Companies need to be near their clients to be competitive. “The demand of customers here is to be very local.
For example, we have just expanded our office in Abu Dhabi, as in Abu Dhabi they want to see you present in there even if you have excellent infrastructure in Dubai,” says Franco Restelli, president, Invensys Operations Management, Middle East and North Africa.
Invensys Operations Management has an office in Dubai, and has recently opened new office in Abu Dhabi.
In addition, as the government obliges companies to hire UAE nationals, and service companies are facing challenges in recruiting the right people. “There is a strong push for localisation, which shows good intentions. But the problem is that most of talented people are hired by the end users, and for us it is difficult to hire the best,” he explains.
“This will ultimately trigger competition between us and our customers to get the best talents,” concludes Restelli.
Emerson in Abu Dhabi
Emerson has opened the region’s first flow calibration centre and beefed up its UAE presence in recent years, most notably with its $4 million office and service centre in Mussafah, Abu Dhabi, to serve the grown downstream business there in 2010.
Both facilities, and the one in the DMMC, offer installation, start-up, repair, recalibration, and transmitter diagnostics services. The company has also invested in a training centre that provides a range of services, allowing client’s maintenance teams to be more self-sufficient.
