Abu Dhabi National Oil Company and Mubadala Investment Company-owned Cepsa awarded Spanish engineering company Tecnicas Reunidas a contract to study the development of a planned petrochemicals project in Ruwais.
The Spanish contractor will execute front-end engineering and design on the project to produce linear alkyl benzene (LAB), a chemical compound that is used in industrial detergents, Adnoc said on Tuesday.
This development, the first to be advanced as part of the Dh165 billion downstream investment strategy Adnoc announced in May, will produce 225,000 metric tonnes annually of normal paraffin and 150,000 metric tonnes of LAB.
In an interview with The National in November, Cepsa chief executive Pedro Miro said the company valued the scheme at between $575 million and $625 million (Dh2.11bn – Dh2.29bn). The LAB plant in Abu Dhabi will be located in a derivatives park, which Adnoc said in its downstream strategy would act as a manufacturing hub on the back of products from the expanding refining and chemicals facilities in Ruwais.
"The park will act as a prime catalyst for the next stage of Adnoc's petrochemical transformation by inviting partners to invest and produce new products and solutions from the growing range of feedstocks that are available in Ruwais,” said Abdulla Al Messabi, business unit manager at Adnoc Refining & Petrochemicals.
Spanish energy company Cepsa, which held back its initial public offering at domestic exchanges, operates LAB plants in Spain, Canada and Brazil.
Cepsa, which is fully owned by Mubadala, plans to spend $500m in the next three years to develop its LAB business globally. Apart from its investment in Abu Dhabi, the Spanish company is in the process of upgrading some existing plants, on which it would spend the remainder of its capital expenditure.
"Our estimation for the LAB plant here is $575m and $625m, and since it’s a 50:50 joint venture, it will be $300m each way.
"We have a little bit less than $100m in Spain, $50m in Brazil and another $25m to $30m in Canada," Mr Miro said.
________________
Read more:
Abu Dhabi-owned Cepsa looks at $500m spend for global speciality chemicals business
Exclusive: Mubadala to take investment decision on $6bn Pakistan refinery
Exclusive: Mubadala's petroleum and petrochemicals wing eyes lower cost barrels
________________
"All of this gives us [a capex] of $500m for [the LAB business] in the next two and half to three years, keeping in mind we have a partner in Brazil, Petrobras, which is sharing 27 per cent and we have 73 per cent, so the total capex for the LAB plants Cepsa is involved in is higher," he added.
Meanwhile, Borouge, the UAE’s largest chemicals company, said on Tuesday it had begun construction of a fifth polypropylene unit at its third plant in the Ruwais facility. The scheme is set to boost polypropylene capacity by more than 25 per cent to 2.24 million tonnes per year.
In July, the chemicals company awarded Italy’s Marie Tecnimont the contract to build the polypropylene plant.
Polypropylene is a vital petchems product that is a basic in the plastics industry and has experienced increasing demand from consumer markets in Asia, notably India and China.
The new unit, known as PP5, is set to have a production capacity of 480,000 tonnes per year and will come on-stream in the third quarter of 2021.
With the addition of the latest unit, Borouge’s total production of polymers will increase by almost 11 per cent to reach 5 million tonnes per year.
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
UAE jiu-jitsu squad
Men: Hamad Nawad and Khalid Al Balushi (56kg), Omar Al Fadhli and Saeed Al Mazroui (62kg), Taleb Al Kirbi and Humaid Al Kaabi (69kg), Mohammed Al Qubaisi and Saud Al Hammadi (70kg), Khalfan Belhol and Mohammad Haitham Radhi (85kg), Faisal Al Ketbi and Zayed Al Kaabi (94kg)
Women: Wadima Al Yafei and Mahra Al Hanaei (49kg), Bashayer Al Matrooshi and Hessa Al Shamsi (62kg)
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
The specs: Rolls-Royce Cullinan
Price, base: Dh1 million (estimate)
Engine: 6.75-litre twin-turbo V12
Transmission: Eight-speed automatic
Power: 563hp @ 5,000rpm
Torque: 850Nm @ 1,600rpm
Fuel economy, combined: 15L / 100km
