Abu Dhabi refiner Takreer diversifies products to meet demand from transport sector

Abu Dhabi Oil Refining Company, known as Takreer, is diversifying its product line-up to better meet rising demand from the transport sector in Asia, as it seeks to boost profit margins amid lower crude prices.

This year, the state refiner brought online an extra 417,000 barrels per day (bpd) of capacity at its Ruwais facility, located about 240 kilometres west of Abu Dhabi city, after completing a US$10 billion expansion programme to double capacity.

Since then, its parent, Abu Dhabi National Oil Company (Adnoc), has been diverting marginally more of its Murban grade crude to the refinery rather than exporting it to customers in Asia.

Together with the addition of two refineries in Saudi Arabia, this has added more than 1 million bpd of new refining capacity in the region.

Much of the output is being geared towards diesel production to meet demand in the region and Asia, according to the UK consultancy Energy Aspects.

“These refineries are going to have a meaningful impact on every product market, and we are seeing a shift toward upgrading the quality of products to meet tighter export specification for countries,” said Richard Mallinson, energy analyst for Energy Aspects.

According to information provided by Takreer at the Abu Dhabi International Downstream conference yesterday, by the end of the year the Ruwais extension will also have the capacity to produce up to 600,000 tonnes annually of high-quality base oils.

These oils are used mostly as a lubricant in the car industry, which is projected to grow rapidly, according to US-based Transparency Market Research.

“Rapid population growth and urbanisation is bolstering the continuous rise in vehicle production volumes globally,” the firm said in a report released in December. It added that this would “likely increase the demand for finished lubricants and base oils” over the next five years.

It also projected that global demand for base oil would increase by 14.5 per cent by 2020 compared to 2013.

By the end of the year, Ruwais will have annual capacity of 500,000 tonnes of Grade III base oil and annual capacity of 100,000 tonnes of Group II base oil. Since groups II and III are cleaner, the product can easily be exported to markets with stringent emission regulations such as the United States and Europe.

Mr Mallinson said that base oil producers were responding to the increase in standards globally as countries tighten environmental regulations, partly aimed at cutting carbon emissions, on a par with the US and Europe.

Ali Al Mansoori, planning and supply department manager at Takreer, said yesterday that the company planned to expand storage capacity and develop greener fuels.

“Our ambitions will not stop here, this is just the beginning,” he said.

Follow The National's Business section on Twitter