Adnoc aims to double sulphur output as Al Hosn sour gas project outpaces targets

The Al Hosn project has outperformed expectations for Adnoc and Occidental Petroleum, which has encouraged the companies to set more ambitious targets.

The Abu Dhabi National Oil Company (Adnoc) aims to double sulphur output and capture the world’s top market spot in the product as it ramps up production from its Al Hosn sour gas project in the Western Region.

The Al Hosn project has outperformed expectations for its partners, Adnoc, with 60 per cent, and operator Occidental Petroleum, with the remaining 40 per cent, which has encouraged the companies to set more ambitious targets.

“We produce 6 million tonnes of sulphur per year and we expect production to double over the coming decade [which will] make the UAE the largest producer of sulphur in the world,” said Omar Al Suwaidi, Adnoc’s gas chief, speaking at a conference in Abu Dhabi.

Sulphur is recovered during the treatment of the gas.

Vicki Hollub, Oxy’s chief executive, told investment analysts last week that it had increased the capacity of the Al Hosn fac­ility, which processes the sour gas (high in hydrogen sulphide content) from the Shah gasfield there, to 110 per cent of rated cap­acity. She also said it allowed the company to increase its booked oil and gas reserves.

It has also improved the company’s financial outlook. “Better pricing as well as improved production and cost reductions at Al Hosn and in Oman should increase free cash flow from our international oil and gas operations by more than US$400 million compared to last year,” she said.

Adnoc and Oxy have announced plans to increase production capacity at the Shah field by 50 per cent but have not yet provided a timetable.

The world market for sulphur totals about 71 million tonnes and was valued at about $9bn in 2015, but the price is highly volatile. It is used as a precursor chemical mainly for sulphuric acid, which in turn is used to produce phosphate fertilizers for use in agriculture.

The UAE’s share of the world sulphur market tripled last year after production from Al Hosn ramped up.

China is the world’s largest producer, at 11 million tonnes a year, followed by the US at just over 9 million tonnes a year. The market grew at about 2.7 per cent a year from the start of the century to the end of 2014, but that is forecast to slow to 2.2 per cent a year to the end of 2019, according to IHS Markit, an industry research firm.

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