Adnoc awards design contract for new refinery to Wood Group

The facility will be part of the world's biggest integrated refinery and petrochemicals complex

Adnoc aims to build the world's largest integrated refining complex by 2025. Courtesy Adnoc

Abu Dhabi National Oil Company awarded a design contract for the new 600,000 barrel-per-day refinery in Ruwais, as it speeds up plans to create the world’s biggest integrated production facility that is part of a Dh165 billion downstream push.

British oilfield services firm Wood Group won the pre-front end engineering design (pre-Feed) contract, the second stage of a four-phase process to construct the facility, Adnoc said in a statement on Thursday. The pre-feed is expected to be concluded by the end of the year. Feed refers to basic engineering work that is carried out after completion of conceptual design or feasibility study.

“Today marks a significant step towards fulfilling Adnoc’s strategy of developing the largest integrated refinery and petrochemicals complex in the world,” said Jasem Al Sayegh, chief executive of Adnoc Refining, in the statement.

The UAE, which accounts for 4.2 per cent of global crude production much of it from fields owned and operated by Adnoc has undertaken a strategic re-positioning to build more capacities in products, which fetch higher margins in Asia, where much of the demand comes from. The state-backed company will boost its refining capacity by more than 65 per cent to 1.5 million bpd by 2025 and triple petrochemical production to 14.4 million tonnes per annum during the same period.

Adnoc Refining has a total refining capacity of 922,000 bpd and has the world’s fourth-biggest single site refinery. After the development of the new 600,000 bpd refinery, the total capacity is expected to rival India’s 1.24 million bpd Jamnagar refinery, currently the world’s biggest.

The downstream investment is centred around Ruwais, the site of its current refinery and future plans to turn the Western region city into an industrial hub.

“In addition to investing in its refining and petrochemicals operations, Adnoc will develop an integrated downstream ecosystem in Ruwais, including new derivatives and conversion parks, to stimulate in-country value creation, employment opportunities, and private sector and GDP growth,” the statement said. “It also intends to undertake highly targeted overseas investments to secure greater market access for its downstream products.”

Adnoc is spending Dh18bn for its in-country value programme by which it ensures that local suppliers and companies are engaged across its value chain to boost the local economy.

The design award follows last month's signing of agreements with Italian energy company Eni and Austrian OMV, partly owned by Abu Dhabi's Mubadala Investment Company, to acquire stakes in Adnoc Refining and jointly set up a trading unit. Eni and OMW will own 20 per cent and 15 per cent respectively in the refining unit, with Adnoc retaining the remaining stake.

Eni and OMV will also own 20 and 15 per cent stakes, respectively, in the newly established trading joint venture that will export up to 70 per cent of volumes generated by Adnoc Refining. The remaining 30 per cent locked in for the domestic market will be managed by the Abu Dhabi producer.

In April last year Adnoc announced its intention to set up a non speculative trading unit as the company looks to expand revenue streams and beef up sale of crude and products. Other state-owned firms in the region have adopted a similar strategy.

Adnoc has been busy awarding contracts to international oil companies and services firms as it seeks to boost its oil production capacity beyond 3 million bpd and ramp up its gas production, with the ultimate aim of becoming a net exporter of the fuel.

Last year, Abu Dhabi’s Supreme Petroleum Council approved a Dh486bn five-year capital expenditure plan to unlock the emirate’s sour gas caps and boost its oil output capacity to 5 million bpd by 2030. The company plans to raise output capacity to 4 million bpd by 2020.

Adnoc said in November that it discovered large hydrocarbon deposits equivalent to a 1 per cent increase to existing oil reserves and a 7.1 per cent addition to proven gas reserves.

For more, listen to the Business Extra podcast: How Adnoc earned world's top oil and gas credit rating