Adnoc unveils ‘milestone’ $45bn plan to extend refining complex

Staff are seen at the Panorama Digital Command Centre at the ADNOC headquarters in Abu Dhabi. (Reuters)
Updated 13 May 2018
0

Adnoc unveils ‘milestone’ $45bn plan to extend refining complex

  • ADNOC aims to create world's biggest integrated site
  • The Ruwais project is expected to create 15,000 new jobs by 2025, and add 1 percentage point to GDP annually

LONDON: Abu Dhabi National Oil Company (Adnoc), the state-owned energy company of the UAE, has announced plans to invest $45 billion, along with international partners, over the next five years to expand existing facilities at Ruwais in the west of the country.
“We aim to create the largest integrated refining and petrochemicals destination in the world,” Adnoc CEO Sultan Al-Jaber told the opening session of the Adnoc Downstream Investment Forum in the UAE capital.
He said that while exploration and production remained an important core business, transforming and expanding the downstream had become a crucial element of future strategy.
“The fundamentals of the energy landscape have shifted, and that shift has ended the era of ‘business as usual.’ This is a milestone event for Adnoc,” Al- Jaber said.
The opening day of the forum brought together industry leaders to discuss the broad theme of investment and expansion outside the upstream areas of exploration and production. 
Some of the world’s biggest energy companies — including Adnoc and Saudi Aramco — have recently focused on downstream expansion, especially in petrochemicals.
The Ruwais project would create 15,000 new jobs by 2025, and add 1 percentage point to GDP annually, he predicted. The aim is to double crude refining and triple petrochemical production. As part of the plan, the refining capacity of the Ruwais facility, which currently stands at 922,000 barrels a day, will be increased by 2025 through an additional new 
refinery, creating a total capacity of 1.5 million barrels per day.
Al-Jaber said that the sharpest growth in world energy over the next 20 years would come from petrochemicals and polymers, and that two thirds of that growth would come from markets in Asia.
“We will look for parties willing to invest with us locally in order to grow with us globally, partners who bring strategic value-add and access to smart capital,” Al-Jaber added.
“Some say the era of oil is growing to a close, but nothing is further from the truth, and in fact the opposite is true. Oil will remain essential for transport, and for the building blocks of every day life. The modern world is enabled and improved by the humble hydrocarbon molecule,” he said.
Suhail Al-Mazrouei, the energy minister of the UAE and president of OPEC, told the forum that the there was no target price for crude oil and that the priority remained to stabilize the market and balance global inventories.
“We are not aiming at a certain price and we cannot do that anyway. There are so many moving parts to the oil market that it is impossible to do it,” he said.
Al-Mazrouei was asked if recent reports suggesting OPEC would like to see oil at $100 a barrel, were accurate. 
“The objective of OPEC is to reach market stabilization at inventory levels healthy for producers and consumers. We do not want $40 fluctuations in the price every few months,” he said.
He added that a price between $65 and $85 per barrel was good for investment in the global oil business. “We are also worried about incentives for investment in future oil supply,” Al-Mazrouei said.
Daniel Yergin, energy expert and author of the Pulitzer-winning history of the oil industry The Prize, said of the Ruwais initiative: “What is significant about this is that Abu Dhabi has a long term capacity for partnership with other leaders in 
energy. That thinking is built into their DNA, and it’s an advantage.”
Helima Croft, managing director and global head of commodity strategy at RBC Capital Markets, said that global demand for oil and petrochemical products looked likely to hold up. “We’re in a synchronized global growth story.”
But she warned that if oil prices were to spike to near $100 a barrel it would “kill off some demand” for crude.
On the effects of a possible hit to oil supplies as a result of the reimposition of sanctions on Iran by the Trump administration, she said that Saudi Arabia and the UAE had the capacity to increase their production to make up the difference.
“I have no doubts about the willingness of the Gulf states to create extra supply to compensate for any fall off in Iranian supply,” she added.


Pak rupee remains under pressure against dollar

Updated 2 min 48 sec ago
0

Pak rupee remains under pressure against dollar

  • Exchange companies are required to maintain record of all buy and sell transactions equivalent to $500
  • Dollar supply declines from $3m per day to only $1m as buyer and seller decline to share identification data

KARACHI: The Pakistani rupee remains under pressure against the US dollar in the open market as insufficient dollar inflows couple with further devaluation rumors, currency dealers and analysts say.
“People think that in the coming days the Pak rupee will be further under pressure due to the increasing demand for the dollar, so they start buying, anticipating a dollar shortage,” said Zeeshan Afzal, executive director-research at Insight Securities, referring to the recent hike in the value of greenback against the Pak rupee. which touched PKR119.05 ($1.03) on Friday and closed down at PKR118.70 on Saturday in the open market.
“Perception and real need (demand) drives the currency exchange market in both ways,” Afzal told Arab News.
“In Ramadan the inflow of remittances has declined, demand for the dollar from those going for Umrah has increased,” Muzamil Aslam, senior economist and CEO of EFG-Hermes Pakistan said.
Dr. Miftah Ismail, finance minister of Pakistan, has repeatedly denied further devaluation of the national currency, which has been devalued twice up to 10 percent recently.
However, Aslam believes the rupee will be further devalued, and he sees no way out of the current situation.
Another reason for the weak Pak rupee is that Pakistan’s historic high current account deficit of $14 billion due to increasing imports, insufficient exports, workers’ remittances and other official inflows to create supply-demand equilibrium.
Demand usually comes from the public, investors and importers, Afzal said. “As our imports are more than our exports and other foreign exchange inflows, the pressure on the US dollar keeps mounting.”
Pakistan is also taking steps against money laundering as part of its international commitment to combat terror financing ahead of the Financial Action Task Force meeting in June when Pakistan will be gray-listed.
As part of the measures, the State Bank of Pakistan recently directed exchange companies to maintain a record of the identification documents such as Computerized National Identity Card, National Identity Card for Overseas Pakistanis or passport for all buy and sell transactions in foreign currency equivalent to $500, a minimum threshold in the world.
“The move of the State Bank of Pakistan is aimed at documenting the transactions in order to discourage terror financing, etc,” Afzal said, dispelling the impression that pressure on the dollar was due to the central bank’s initiative.
However, foreign exchange dealers claimed that the decision of State Bank of Pakistan to reduce the threshold from $2,500 to $500 for identification purposes has negatively affected the business of registered exchange dealers.
“Our daily surplus supply of the dollar was around $3 million per day until a week ago, when the central bank’s measures were not enforced,” Malik Bostan, president of the Forex Association of Pakistan, told Arab News. “The supply is now down to only $1 million per day as the currency exchange business has shifted to unregistered dealers.
“There are around 30,000 unlicensed currency dealers all over Pakistan,” Bostan claimed, adding that most buyers and sellers don’t want to share their identification and choose to go to unregistered dealers.
“We have asked the central bank to come up with necessary laws to protect registered currency dealers,” Bostan said.
“Despite facing an adverse business situation, we have assured our support to the central bank to take whatever steps are needed to get Pakistan off the gray list of FATF,” Bostan ensured.
He said that the pressure on the dollar was unusual in the month of Ramadan as increased inflows of the dollar are traditionally witnessed during this period.