Mapping out ADNOC’s downstream ambitions

In the 1970s when Abu Dhabi National Oil Co. was looking for a city to house its industrial staff, it chose a rural desert town close to its onshore fields with deep waters for easy access to oil tankers. Today, Ruwais is more than just a port city. It is key to ADNOC's oil ambitions, including its quest to turn the newly-launched Murban futures contract into an international benchmark for oil headed to Asia.

A $3.5-billion crude flexibility project at Ruwais refinery, Abu Dhabi's biggest with a capacity of 817,000 b/d, will revamp nearly half of the facility to process crudes other than Murban, freeing up the flagship grade that underpins the futures contracts launched on March 29 on ICE Futures Abu Dhabi, or IFAD, in the UAE capital. With nine international partners in IFAD, ADNOC and the Intercontinental Exchange are pinning hope that the futures contract will transform the way of pricing oil produced in the Middle East and sold in Asia.

With the crude flexibility project, which is now more than 85% complete, the Ruwais refinery will be able to process Upper Zakum crude—pumped from offshore oil fields—for the first time. The refinery will also be able to process over 50 other regional and international grades starting 2022. Full ramp up is expected by 2023.

Beyond refinery transformation

But ADNOC is working on more than just transforming its refinery in Ruwais, where over $11 billion worth of projects are currently under development, including the refinery project.

As ADNOC seeks gas self-sufficiency, it is expanding ADNOC Gas Processing, the company's biggest such facility that handles 8 bcf/d or 85% of its gas.

The two multi-billion dollar projects at ADNOC Gas Processing are aimed at boosting gas capacity in Ruwais through the design of a new gas compressor station and pipelines to ramp up sales gas network connectivity.

ADNOC needs to boost its gas processing facility as it ramps up production, especially after disclosing in 2019 that it had some 160 Tcf of unconventional gas recoverable resources, on top of 273 Tcf of conventional gas.

Increasing gas supply will be key to meeting domestic power demand as well as providing feedstock to industrial and petrochemical projects in the UAE.

Driving up petrochemical production is another key plank of ADNOC's downstream ambitions.

Borouge, a joint venture between ADNOC and Austria's Borealis that produces polyolefins, will boost its capacity by 11% to 5 million mt/year by end-2021, its CEO Hazeem al-Suwaidi told S&P Global Platts. Borouge is also working on a mega petrochemical project, Borouge 4, which is currently being considered for investment approval, he said.

The petrochemical maker is also part of a wider ADNOC study on the production of hydrogen.

Clean energy pivot

Producing blue hydrogen and ammonia has become a major pivot for ADNOC, which wants to cater to the rising global demand for clean energy products, also from Ruwais.

ADNOC and its partner Fertiglobe have inked blue ammonia deals with three Japanese customers and more is on the way.

Fertigloble, a 58:42 partnership between Netherlands-listed chemicals firm OCI and ADNOC, will produce the blue ammonia from its Fertil plant in Ruwais.

A joint study agreed in July between ADNOC and state-owned Japan Oil, Gas and Metals National Corp. (Jogmec), INPEX and JERA will explore the possibility of producing 1 million mt/year of blue ammonia in Abu Dhabi and transporting it to Japan, a Jogmec source previously told Platts.

The agreement follows the Japanese Ministry of Economy, Trade and Industry's first fuel ammonia deal in cooperation with ADNOC in January as Tokyo intends to develop its supply chain of blue ammonia, possibly in the Middle East, by the late 2020s.

Fertiglobe has also joined ADNOC and Abu Dhabi sovereign wealth fund ADQ as partner in a greenfield blue ammonia project with a capacity to produce 1 million mt/year. The project is expected to start production in 2025 and will be located in TA'ZIZ, itself a chemical joint venture between ADNOC and ADQ

Seven projects in TA'ZIZ, including the blue ammonia project, will have an investment value exceeding $6 billion once they are complete, acting CEO of TA'ZIZ Khaleefa al-Mheiri told Platts.

TA'ZIZ is seeking regional and global partners for the projects, which are expected to have "world-scale" capacity once they start production in 2025, and has already attracted India's Reliance Industries to participate in three.

"With international investors, we are looking to bring in operational capabilities, access to technology and off-takers that would support us in marketing those products," al-Mheiri said.

As ADNOC expands on its downstream plans with projects such as TA'ZIZ, Ruwais will play even a bigger role in transforming the national oil producer into a global energy player vying with Western majors, even in the clean products arena.