Abu Dhabi National Oil Company signed an agreement with global methanol producer Proman to build the UAE's first methanol production facility at the Ta'ziz Industrial Chemicals Zone in Ruwais to meet growing global demand for the commodity.
The natural gas to methanol facility is expected to have an annual capacity of up to 1.8 million tonnes and will be built by Abu Dhabi Chemicals Derivatives Company (Ta'ziz), a joint venture between Adnoc and Abu Dhabi investment and holding company ADQ, in partnership with Proman, the world’s second largest methanol producer.
The facility will meet "growing domestic and international demand" for methanol, which is gaining momentum as a lower-emission fuel alongside its existing uses spanning industrial products, according to a statement on Thursday. It is subject to regulatory approvals.
“We are pleased to welcome Proman as a strategic partner as we develop the UAE’s first domestic methanol production facility. This world-scale plant advances the Ta'ziz mission to diversify the UAE’s economy and accelerate industrial development, by enabling local supply chains through the production of new chemicals in the UAE," said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc.
"As Proman’s first investment in the UAE, our agreement underscores the continued appeal of the UAE as a highly attractive destination for international capital, supporting long-term industrial growth for Abu Dhabi’s private sector.”
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The Ruwais Industrial Complex is located 250 kilometres west of the UAE's capital, Abu Dhabi. Victor Besa / The National -
Adnoc plans to build a large-scale 'blue' ammonia plant at the complex. Victor Besa / The National -
The ammonia plant will be located at the Ta'zizz industrial and chemicals hub. Victor Besa / The National -
The birthing area and container terminal in place will allow materials to be easily transported. Victor Besa / The National -
The view from the Borouge 3 Tower shows the size of the complex. Victor Besa / The National -
The area will help to grow the UAE's manufacturing and industrial base. Victor Besa / The National -
Adnoc and CNPC have agreed to explore downstream and upstream partnership opportunities. Victor Besa / The National -
The facility will have the capacity to produce 1,000 kilotonnes of ammonia per year, Adnoc says. Victor Besa / The National -
Blue ammonia is a more easily transportable fuel source made from blue hydrogen. Victor Besa / The National -
The UAE is drawing up a comprehensive road map to position itself as an exporter of hydrogen. Victor Besa / The National -
Adnoc already produces 300,000 tonnes of hydrogen annually and plans to expand this to more than 500,000 tonnes. Victor Besa / The National -
A sign displays the old name of Adnoc’s gas processing plant. Looking ahead, the company plans to achieve gas self-sufficiency by 2025. Jennifer Gnana / The National
Methanol, a key product in the chemical industry, is mainly used for producing other chemicals, such as formaldehyde, acetic acid and plastics. Methanol production has nearly doubled in the past decade, with about 98 million tonnes produced a year, the International Renewable Energy Agency (Irena) said in a 2021 report.
Under current trends, production could rise to 500 million tonnes a year by 2050, it said.
The methanol market is projected to grow at a compound annual rate of more than 4.87 per cent between 2022 and 2027, according to Mordor Intelligence. Over the short term, one of the major factors driving the market is the increasing demand for methanol-based fuel, it said.
"Methanol is preferred to conventional gasoline fuel for reducing carbon monoxide, nitrogen oxides and hydrocarbon emissions."
Growing global interest in methanol as a cleaner fuel, particularly for the shipping sector, is set to drive a significant increase in worldwide methanol demand over the coming decade, said David Cassidy, chief executive of Proman.
The industry's growth is expected to be driven by emerging economies in Africa and Asia.
Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc
Production of methanol in the UAE will lead to a decreased reliance on imports, enabling local manufacturers to "Make it in the Emirates" and establish greater resilience among domestic supply chains, the statement said.
The move also supports the Ministry of Industry and Advanced Technology’s mission to diversify the UAE’s economy and accelerate industrial development. Chemicals is a priority sector for the UAE's Operation 300bn strategy, which aims to raise the industrial sector’s contribution to national gross domestic product to Dh300 billion by 2031.
"This will be the first methanol production facility in the UAE and will be one of the most energy efficient and low-emitting plants in the world," Mr Cassidy said.
"As such, this is a particularly opportune time to invest in the UAE’s domestic downstream production capacity. We are excited to help drive forward the ambitious Ta'ziz industrial development and the UAE’s downstream growth strategy."
The Ta'ziz development has received "significant interest" from local and international investors since its launch in November 2020, the statement said.
Ta'ziz comprises three industrial zones. The first is an Industrial Chemicals Zone that will host chemicals production facilities, with seven proposed projects currently in the design phase.
The second is the Light Industrial Zone, which will house downstream conversion industries that will convert the outputs from the chemicals zone into consumable products.
The final one is the Industrial Services Zone, which will have services companies to cater to the Ruwais Industrial Complex.
So far, partnership agreements have been signed with Fertiglobe, GS Energy and Mitsui for the proposed development of a low-carbon ammonia production facility and with Reliance Industries for a proposed ethylene dichloride, chlor-alkali and polyvinyl chloride production facility.
Eight UAE-based investors have also signed agreements with Ta'ziz for up to a 20 per cent stake in a portfolio of chemicals projects in the chemicals zone, the first domestic public-private partnerships in Abu Dhabi’s downstream and petrochemicals sector.
Final investment decisions for these chemical projects are expected later this year and are subject to regulatory approvals, the statement said.
A new proposed joint venture agreement was also signed with AD Ports Group to develop a ports and logistics facility at Ta'ziz.
