Chemical city is a step nearer

The Abu Dhabi Government's flagship chemicals company has selected the master planner for a complex that will be part of the emirate's largest chemicals manufacturing centre.

The Abu Dhabi Government aims to compete with European petrochemical companies. Mark Lennihan / AP Photo

ABU DHABI // The Abu Dhabi Government's flagship chemicals company has selected the master planner for a complex that will be a part of the emirate's largest chemicals manufacturing centre.

The facility is designed to helpAbu Dhabi diversify away from an economy still dominated by oil exports. Halcrow, a UK-based consultancy, will map the development of the industrial city planned by the Abu Dhabi National Chemicals Company, or ChemaWEyaat, which is called Madeenat ChemaWEyaat Al Gharbia, as well as the chemical maker's other production site in Al Taweelah.

Plans for the site at Al Gharbia include an export terminal, facilities to take in seawater, and a cooling system in the industrial city. ChemaWEyaat would not confirm whether it still put the project's total value at US$20 billion (Dh73.46bn), as was previously reported.

The company chose to develop the site in Al Gharbia, also known as the Western Region, after the Government in October granted 70 square kilometres of land next to another industrial complex in Ruwais that houses facilities for Borouge, GASCO and Takreer.

Halcrow's work will also include a master plan for what ChemaWEyaat hopes will be the world's largest chemicals reformer, which would help to produce 70,000 barrels per day of benzene and other compounds, as well as light naphtha and liquefied petroleum gas for export.

ChemaWEyaat was created by presidential decree in 2008 and is jointly owned by the International Petroleum Investment Company, Abu Dhabi Investment Council and Abu Dhabi National Oil Company (ADNOC). ADNOC intends to provide feedstocks for production in Al Gharbia.

European makers have complained that the highly subsidised cost of feedstocks in the GCC region amounts to unfair competition. Recently, Gulf countries have been hit with allegations of dumping by countries including India, which claim that countries such as Saudi Arabia sell petrochemicals below the cost of production.

"The projects carried out by chemical industries in the country have largely been successful due to the strong government support that we receive," said Mohammed al Azdi, ChemaWEyaat's chief executive, in October.

Colin Chapman, the president of the Euro Petroleum Consultants, based in London, said such resources were driving the shift in large-scale investment in petrochemical production from Europe to the Middle East.

"If you have economy of scale and low-cost feedstock, you're in a very privileged position," Mr Chapman said.

"The Middle East strategy of investing in higher-value products is a good one. Development in the UAE is very impressive. It will attract more and more people to the region."

The development of the complex in Al Gharbia will help to boost total petrochemical output in the Gulf. Total capacity was 105 million tonnes at the end of last year and is projected to rise to 153 million tonnes by 2015.

That growth includes the planned expansion of Qatar's Ras Laffan industrial city and a joint venture between Saudi Aramco and the American company Dow Chemical in Al Jubail. The project in the kingdom has been valued at between $17bn and $25bn.

"There is a very aggressive expansion drive as we speak," said Dr Abdulwahab al Sadoun, the secretary general of the Gulf Petrochemicals & Chemicals Association, an organisation based in Dubai.

There is sufficient demand from manufacturing giants in Asia and other developing regions to take up that demand, Dr al Sadoun said, adding that Gulf firms would be competing with European and US petrochemical makers rather than other GCC producers.

"They will not be competing among themselves," he said. "Those industries are export-oriented. The clients are big."