Adnoc and ADQ target $5bn worth of projects in Ruwais derivatives park

The tie-up between the state oil company and industrial holding company will be called Ta’ziz

Adnoc plans to explore the potential of new fuels such as hydrogen as it moves to reduce its carbon intensity over the next decade. Courtesy: Adnoc

Adnoc and industrial holding company ADQ plan to collaborate on projects worth $5 billion in Ruwais Derivatives Park.

The companies' joint venture, Ta'ziz, will look to invest in chemical projects worth $3bn, with $2bn expected to be spent on the development of port and infrastructure facilities in Ruwais.

“Ta’ziz combines the strengths of Adnoc and ADQ to create a unique platform that will act as a key driver and catalyst for the UAE’s industrial development and economic diversification,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and Adnoc group chief executive.

“Our new partnership will strengthen our position as a globally competitive chemicals hub and destination for foreign direct investment, leveraging technology to further grow the UAE’s advanced manufacturing base.”

Adnoc and ADQ announced the formation of the venture in July as part of plans to “select anchor chemicals projects” and attract investors to the industrial hub in the emirate’s Al Dhafra region.

They identified chemical compounds that can be used in water treatment, metallurgy, agriculture, pharmaceuticals, adhesives and vehicles for key projects in Ruwais.

Among some of the compounds that are expected to be manufactured after the completion of feasibility studies are chlor-alkali, ethylene dichloride, maleic anhydride, methanol, ammonia, isopropyl alcohol and elastomers.

The total project investment could exceed $3bn, with most chemicals set to be manufactured in the UAE for the first time.

An industrial ecosystem fostered by Adnoc and ADQ will comprise a new port, utilities, infrastructure, feedstock and shared services and could cost more than $2bn.

Contracts have already been awarded for the first phase of the development of the park, the companies said.

Geotechnical and topographical surveys, as well as marine, environment, health and safety assessments are under way.

The surveys will be completed by year-end, paving the way for civil engineering works for the construction and dredging of a new port facility.

Design and engineering contracts for the planned infrastructure, including chemical plants, will be awarded early next year, they said.

“New projects can be plugged into the existing park infrastructure, lowering the cost of investment and further enhancing the Ruwais Derivatives Park’s competitiveness,” the companies said.

Adnoc and ADQ are also in the process of creating a park management company to ensure the ease of doing business.

The new entity will help initiate contact with relevant service providers and government agencies for potential investors.

The creation of Ta’ziz will diversify critical industrial components in the UAE and also help forge long-term collaborations between companies, said ADQ chairman Mohamed Al Suwaidi.

“With companies such as Abu Dhabi Ports, Abu Dhabi National Energy Company, Etihad Rail, Emirates Steel, Ducab and Arkan, ADQ has much to bring to this joint venture,” he said.

Adnoc invited international oil companies and financial institutions in 2018 to invest about $45bn to develop its downstream sector.

The venture with ADQ also comes after a flurry of investment activity in Adnoc’s midstream sector this year.

A consortium of the world’s leading infrastructure and sovereign wealth funds signed an agreement worth $20.7bn in June to invest in Abu Dhabi’s natural gas pipeline infrastructure.

Investors such as Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, the Ontario Teachers’ Pension Plan Board, South Korea’s NH Investment & Securities and Italy’s Snam bought into the infrastructure deal – the largest in the energy sector this year.

Adnoc also held its second annual trading forum yesterday, during which the president of ICE Futures Europe, Stuart Williams, said the new Murban Futures Contract based on Abu Dhabi’s flagship crude grade will begin to trade on March 29 next year.

It will be traded on ICE Futures Abu Dhabi, or IFAD, a new trading hub at the Abu Dhabi Global Markets.

“We are seeing strong market interest in the new Murban Futures contract," Mr Williams said.

"Just recently, Adnoc and IFAD signed agreements with US companies Chevron and Occidental Energy Marketing, a subsidiary of Occidental, and global trading group Trafigura, where each company has agreed to explore potential opportunities to price US crude exports to Asia off Murban Futures.”