Fujairah expects more refineries to be set up to produce marine fuel

Shipping sector's challenges are making it harder for companies to invest for long term, Energy Ministry official says

Low-sulphur marine fuels are cheaper to produce in the UAE, says Capt Mousa Murad, managing director of the Port of Fujairah. Chris Whiteoak / The National

Fujairah, the world’s third-largest bunkering hub, expects energy companies to set up more refineries in the emirate to produce low-sulphur marine fuels.

“It's cheaper to produce it here … that's why we are expecting more special refineries to come up here,” Capt Mousa Murad, managing director of the Port of Fujairah, told The National on the sidelines of the Fujairah Bunkering and Fuel Oil Forum on Tuesday.

Demand for fuel oil with low sulphur content has been on the rise since the International Maritime Organisation banned ships from using fuels with a sulphur content exceeding 0.5 per cent in 2020.

However, the global demand for bunker fuel (fuel used in ships) is likely to decrease this year, amid a growing risk of recession in Europe and North America.

In January, the International Monetary Fund raised its global economic growth estimate for this year to 2.9 per cent from a previous forecast of 2.7 per cent.

Last month, the fund’s managing director Kristalina Georgieva said that while global economic growth had reached a “turning point”, the balance of risks was still “tilted to the downside.”

Meanwhile, the global shipping sector is still grappling with the effects of the Ukraine war and the Covid-19 pandemic, which led to supply-chain disruptions worldwide.

“These challenges are causing uncertainty in the market, making it difficult for companies to plan and invest in the long term,” said Saif AlMarri, Assistant Undersecretary for Petroleum, Gas and Mineral Resources, in a keynote speech at the event.

Mr AlMarri said overcoming the industry’s current challenges would help advance the “transition towards cleaner and more sustainable fuels”.

This would require “significant investments, co-ordination between governments and industry players, as well as a commitment to sustainability”.

Capt Murad also said that Adnoc’s liquefied natural gas export facility in Fujairah was in the front-end engineering design stage.

The project is expected to increase the state-run energy company’s LNG production capacity by 9.6 metric tonnes per annum.

On being asked whether the port would expand its LNG operations, Capt Murad said it would depend on the type of fuel that is required to be transported.

“We don’t know [if it is] going to be LNG, hydrogen or methanol, but we have to be ready for it,” he said.

Last month, Adnoc and German power company RWE announced the delivery of the first shipment of LNG from the UAE to Germany.

Europe, which is looking to reduce its reliance on Russian gas, has been boosting LNG imports from the US and the Gulf.

In November, QatarEnergy signed two sales and purchase agreements with ConocoPhillips to deliver up to 2 million tonnes per annum of LNG to Germany.

The EU could fall short by about 27 billion cubic metres of gas this year if Russian gas deliveries drop to zero and China’s LNG imports rebound to 2021 levels, the International Energy Agency said in a December report.

The UAE is also bullish on hydrogen and has been drawing up a plan to position itself as an exporter of the clean fuel and tap into its future potential.

Hydrogen, which can be produced using renewable energy and natural gas, is expected to play a key role in the coming years as economies and industries transition to a low-carbon world to mitigate climate change.

“We are going full steam ahead with the energy transition and I am proud to say that our clean power capacity is on track to reach 14 gigawatts by 2030,” said Mr AlMarri.