Arabian Gulf states are expanding their refineries to export more value-added products, to develop a downstream industry and diversify income away from oil and gas, and to meet rising local demand for fuels such as petrol.
The total capacity of Gulf refineries is forecast to increase to approximately 7.4 million barrels per day (bpd) by about 2022, a 70.5 per cent increase over the current 4.3m bpd capacity, according to the consultants Frost & Sullivan.
Saudi Arabia will remain dominant with a 45 per cent share and Kuwait will still hold second place with a 19.2 per cent share.
“In line with the GCC governments’ vision to gradually delink their GDP’s reliance on oil and gas prices, the investments in [the] downstream value-added sector have been witnessing a surge,” says Virein Kumar Yadlapalli at Frost & Sullivan.
“Refining and further downstream [oil and gas] industries such as petrochemicals, speciality chemicals and plastics, among others, have benefited.”
Saudi Arabia, the world’s biggest oil exporter, has been leading the way in building new refineries, which cater both to exports and local demand.
It partnered the French oil firm Total to build a 400,000 bpd refinery in the Gulf industrial city of Jubail last year, and China’s state-owned oil firm Sinopec to construct another 400,000 bpd refinery in the Red Sea industrial city of Yanbu. That facility began operations this year. Saudi Aramco is building another 400,000 bpd refinery in the Red Sea port city of Jizan that is due for completion by 2017.
The UAE has just finished doubling the refining capacity at Ruwais from 417,000 bpd, while Qatar is building a second 146,000 bpd condensate refinery in the industrial city of Ras Laffan.
Condensate is a light oil that is easy to convert into oil-based products.
Most of these new refineries are designed to make Gulf states self-sufficient, halting the imports of products such as petrol, and exporting excess production.
“The current projects within the GCC are based on a strategy from national oil companies to create the export refinery concept,” says Raheel Shafi, a senior consultant for the Middle East at Nexant, a consultancy firm.
“GCC refiners have taken a step further into the value chain of fuel supply to wider markets, effectively using the hydrocarbon reserves to provide very competitive cost structures to markets such as Europe where producers face issues when it comes to size and complexity of existing refining assets.”
The increase in refining capacity in the Gulf region is part of a model designed to focus on downstream industries to derive more value at a time when oil prices are less than US$60 a barrel. Brent has fallen by about 50 per cent since reaching $115 a barrel in June last year as Opec pumps crude at a time when US oil supply is still rising on the shale oil boom. Weaker demand in Europe and Asia, and a strong dollar have also contributed to the slide in oil prices.
“It is a business model that a number of people like to adopt, to have control of the whole supply chain from upstream all the way to downstream, to petrochemicals as well,” says Steve Sawyer, a downstream consultant at energy consultancy FGE.
“If there is a reduction in profit in one sector you can hopefully make it up in another sector and that is what is happening at the moment.
“Having that integrated supply chain network across all parts of the business helps you to smooth out any ups and downs in your cash flow.”
Saudi Arabia is one example of a country focusing on petrochemicals to develop a downstream industry and create much needed jobs.
Sadara Chemical, a $20 billion petrochemical joint venture between Aramco and the US multinational Dow Chemical, will use both gas and naphtha, derived from refined crude, to produce petrochemicals this year. All other Gulf petrochemical projects use gas as feedstock.
Sadara will produce certain complex chemicals for the first time in Saudi Arabia and will help create thousands of jobs, both directly and indirectly.
“After 2025 we expect more refineries to be built in the Middle East and the reason is that Middle East countries need the jobs, so it’s better to export finished products or value-added products rather than crude oil because that creates a lot of jobs locally,” says Mike Sarna, a downstream analyst at consultancy IHS. “You have direct jobs in a refinery of about 1,000 to 1,500 [jobs], but also it creates a lot of secondary jobs because a refinery requires a lot of supplies and material and contractors, and part of it could be local contractors.”
Besides the local agenda, refineries in the Gulf will have a direct impact on the international refining industry. All Gulf refineries are built to very high specifications such as the ability to process fuels with very low sulphur content that enables them to sell products anywhere in the world. Refineries that cannot compete with the size and complexity of the new Gulf refineries are likely to suffer.
“Directionally it [Gulf refinery expansion] will weaken refining margins. It depends by region,” says Alan Gelder, the head of Europe, Middle East, Africa, Russia and Caspian refining & chemicals research for Wood Mackenzie.
“The place least impacted by Middle East refining capacity is North America largely because of the distance and advantage they got on discounted feedstocks.”
Gulf exports of diesel could compete with Russian exports to Europe, while the Middle East could send more naphtha to Asia, analysts say. Africa will be also another key market for Middle Eastern refining products, such as diesel, analysts say.
“Asian refineries are generally smaller scale than the [typical]Middle East export refinery and have configurations that are more geared towards local specifications,” says Mr Shafi. “The Middle East refineries are export refineries retaining the flexibility of producing fuels of a wide variety of specifications.”
But the low oil price could mean that refineries yet to be built, such as Duqm refinery in Oman and Fujairah refinery in the UAE, face delays.
“All projects that are not currently under construction and that are in the planning or engineering stages are at risk of being delayed,” says Mr Sarna. “Those already in construction don’t have any problems.”
In addition, Gulf refineries will need to set up or beef up their trading arms to market and sell their new exports, which will be competing in a global market. Aramco Trading, for example, a wholly-owned unit of Saudi Aramco, is handling refined products marketing and will need to sell the new products globally.
“In the ramp up, they [trading arms] may well be selling products at a bit of a discount just to get rid of them, but once they are up and running it’s really making sure that they can run that refinery at a good utilisation level and find markets for the products,” says Mr Sawyer.
“The stronger the trading arm the better value they will have for those products, the more money will come in.”
dalsaadi@thenational.ae
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Company%20Profile
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Other must-tries
Tomato and walnut salad
A lesson in simple, seasonal eating. Wedges of tomato, chunks of cucumber, thinly sliced red onion, coriander or parsley leaves, and perhaps some fresh dill are drizzled with a crushed walnut and garlic dressing. Do consider yourself warned: if you eat this salad in Georgia during the summer months, the tomatoes will be so ripe and flavourful that every tomato you eat from that day forth will taste lacklustre in comparison.
Badrijani nigvzit
A delicious vegetarian snack or starter. It consists of thinly sliced, fried then cooled aubergine smothered with a thick and creamy walnut sauce and folded or rolled. Take note, even though it seems like you should be able to pick these morsels up with your hands, they’re not as durable as they look. A knife and fork is the way to go.
Pkhali
This healthy little dish (a nice antidote to the khachapuri) is usually made with steamed then chopped cabbage, spinach, beetroot or green beans, combined with walnuts, garlic and herbs to make a vegetable pâté or paste. The mix is then often formed into rounds, chilled in the fridge and topped with pomegranate seeds before being served.
Company name: Play:Date
Launched: March 2017 on UAE Mother’s Day
Founder: Shamim Kassibawi
Based: Dubai with operations in the UAE and US
Sector: Tech
Size: 20 employees
Stage of funding: Seed
Investors: Three founders (two silent co-founders) and one venture capital fund
Electric scooters: some rules to remember
- Riders must be 14-years-old or over
- Wear a protective helmet
- Park the electric scooter in designated parking lots (if any)
- Do not leave electric scooter in locations that obstruct traffic or pedestrians
- Solo riders only, no passengers allowed
- Do not drive outside designated lanes
TOURNAMENT INFO
Women’s World Twenty20 Qualifier
Jul 3- 14, in the Netherlands
The top two teams will qualify to play at the World T20 in the West Indies in November
UAE squad
Humaira Tasneem (captain), Chamani Seneviratne, Subha Srinivasan, Neha Sharma, Kavisha Kumari, Judit Cleetus, Chaya Mughal, Roopa Nagraj, Heena Hotchandani, Namita D’Souza, Ishani Senevirathne, Esha Oza, Nisha Ali, Udeni Kuruppuarachchi
If you go...
Etihad Airways flies from Abu Dhabi to Kuala Lumpur, from about Dh3,600. Air Asia currently flies from Kuala Lumpur to Terengganu, with Berjaya Hotels & Resorts planning to launch direct chartered flights to Redang Island in the near future. Rooms at The Taaras Beach and Spa Resort start from 680RM (Dh597).
The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
MATCH INFO
Manchester City 6 Huddersfield Town 1
Man City: Agüero (25', 35', 75'), Jesus (31'), Silva (48'), Kongolo (84' og)
Huddersfield: Stankovic (43')
Tree of Hell
Starring: Raed Zeno, Hadi Awada, Dr Mohammad Abdalla
Director: Raed Zeno
Rating: 4/5
If you go
Flight connections to Ulaanbaatar are available through a variety of hubs, including Seoul and Beijing, with airlines including Mongolian Airlines and Korean Air. While some nationalities, such as Americans, don’t need a tourist visa for Mongolia, others, including UAE citizens, can obtain a visa on arrival, while others including UK citizens, need to obtain a visa in advance. Contact the Mongolian Embassy in the UAE for more information.
Nomadic Road offers expedition-style trips to Mongolia in January and August, and other destinations during most other months. Its nine-day August 2020 Mongolia trip will cost from $5,250 per person based on two sharing, including airport transfers, two nights’ hotel accommodation in Ulaanbaatar, vehicle rental, fuel, third party vehicle liability insurance, the services of a guide and support team, accommodation, food and entrance fees; nomadicroad.com
A fully guided three-day, two-night itinerary at Three Camel Lodge costs from $2,420 per person based on two sharing, including airport transfers, accommodation, meals and excursions including the Yol Valley and Flaming Cliffs. A return internal flight from Ulaanbaatar to Dalanzadgad costs $300 per person and the flight takes 90 minutes each way; threecamellodge.com
Test series fixtures
(All matches start at 2pm UAE)
1st Test Lord's, London from Thursday to Monday
2nd Test Nottingham from July 14-18
3rd Test The Oval, London from July 27-31
4th Test Manchester from August 4-8
COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
Company%20Profile
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Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%3C%2Fstrong%3E%20Cargoz%3Cbr%3E%3Cstrong%3EDate%20started%3A%3C%2Fstrong%3E%20January%202022%3Cbr%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Premlal%20Pullisserry%20and%20Lijo%20Antony%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%3Cbr%3E%3Cstrong%3ENumber%20of%20staff%3A%3C%2Fstrong%3E%2030%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20Seed%3C%2Fp%3E%0A
Concrete and Gold
Foo Fighters
RCA records
TRAP
Starring: Josh Hartnett, Saleka Shyamalan, Ariel Donaghue
Director: M Night Shyamalan
Rating: 3/5
MATCH INFO
Uefa Champions League semi-finals, first leg
Liverpool v Roma
When: April 24, 10.45pm kick-off (UAE)
Where: Anfield, Liverpool
Live: BeIN Sports HD
Second leg: May 2, Stadio Olimpico, Rome
The%20stats%20and%20facts
%3Cp%3E1.9%20million%20women%20are%20at%20risk%20of%20developing%20cervical%20cancer%20in%20the%20UAE%3C%2Fp%3E%0A%3Cp%3E80%25%20of%20people%2C%20females%20and%20males%2C%20will%20get%20human%20papillomavirus%20(HPV)%20once%20in%20their%20lifetime%3C%2Fp%3E%0A%3Cp%3EOut%20of%20more%20than%20100%20types%20of%20HPV%2C%2014%20strains%20are%20cancer-causing%3C%2Fp%3E%0A%3Cp%3E99.9%25%20of%20cervical%20cancers%20are%20caused%20by%20the%20virus%3C%2Fp%3E%0A%3Cp%3EA%20five-year%20survival%20rate%20of%20close%20to%2096%25%20can%20be%20achieved%20with%20regular%20screenings%20for%20cervical%20cancer%20detection%3C%2Fp%3E%0A%3Cp%3EWomen%20aged%2025%20to%2029%20should%20get%20a%20Pap%20smear%20every%20three%20years%3C%2Fp%3E%0A%3Cp%3EWomen%20aged%2030%20to%2065%20should%20do%20a%20Pap%20smear%20and%20HPV%20test%20every%20five%20years%3C%2Fp%3E%0A%3Cp%3EChildren%20aged%2013%20and%20above%20should%20get%20the%20HPV%20vaccine%3C%2Fp%3E%0A
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%3Cp%3E%3Cstrong%3ECompany%3A%3C%2Fstrong%3E%20Eco%20Way%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%20December%202023%3Cbr%3E%3Cstrong%3EFounder%3A%3C%2Fstrong%3E%20Ivan%20Kroshnyi%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%3Cbr%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Electric%20vehicles%3Cbr%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20Bootstrapped%20with%20undisclosed%20funding.%20Looking%20to%20raise%20funds%20from%20outside%3Cbr%3E%3C%2Fp%3E%0A
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
A%20QUIET%20PLACE
%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Lupita%20Nyong'o%2C%20Joseph%20Quinn%2C%20Djimon%20Hounsou%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EMichael%20Sarnoski%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
Meatless Days
Sara Suleri, with an introduction by Kamila Shamsie
Penguin
More from Janine di Giovanni
Past winners of the Abu Dhabi Grand Prix
2016 Lewis Hamilton (Mercedes-GP)
2015 Nico Rosberg (Mercedes-GP)
2014 Lewis Hamilton (Mercedes-GP)
2013 Sebastian Vettel (Red Bull Racing)
2012 Kimi Raikkonen (Lotus)
2011 Lewis Hamilton (McLaren)
2010 Sebastian Vettel (Red Bull Racing)
2009 Sebastian Vettel (Red Bull Racing)
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Charlotte Gainsbourg
Rest
(Because Music)
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COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Saturday's results
West Ham 2-3 Tottenham
Arsenal 2-2 Southampton
Bournemouth 1-2 Wolves
Brighton 0-2 Leicester City
Crystal Palace 1-2 Liverpool
Everton 0-2 Norwich City
Watford 0-3 Burnley
Manchester City v Chelsea, 9.30pm
Feeding the thousands for iftar
Six industrial scale vats of 500litres each are used to cook the kanji or broth
Each vat contains kanji or porridge to feed 1,000 people
The rice porridge is poured into a 500ml plastic box
350 plastic tubs are placed in one container trolley
Each aluminium container trolley weighing 300kg is unloaded by a small crane fitted on a truck
Singham Again
Director: Rohit Shetty
Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone
Rating: 3/5