Plant to double fertiliser output

Abu Dhabi is set to double its output of fertiliser in four years with the construction of a US$1.2 billion (Dh4.4bn) plant in Ruwais.

The new plant will produce about 2,000 tonnes of ammonia a day for ADNOC's Ruwais Fertiliser to convert into urea.

Abu Dhabi will double its output of fertiliser in four years with the construction of a US$1.2 billion (Dh4.4bn) plant in Ruwais, marking another step to diversifying the economy away from oil. The announcement of a contract awarded to Samsung, of Korea, comes at a difficult time for the fertiliser market, as prices for ammonia and urea collapsed a year ago, along with other commodities, and have yet to recover.

Yeon-Joo Jung, the chief executive of Samsung, said the size of the award demonstrated his firm's capabilities as it looked to win more big contracts from the Abu Dhabi National Oil Company (ADNOC), including a separate project to double the output capacity of the oil refinery in Ruwais. "Samsung Engineering currently has established the project execution capacity of $10bn and will continuously increase its capabilities based on the company's long-term plan," Mr Jung said.

"Samsung Engineering will try its best to win potential multibillion-dollar projects including the planned Ruwais refinery expansion project located in the UAE." The new plant, to be operated by the Ruwais Fertiliser, which is a subsidiary of ADNOC, will produce about 2,000 tonnes of ammonia a day, most of which will be added to ammonia from the company's first plant to be converted into about 3,500 tonnes of urea a day.

The firm has capacity to produce about 2,300 tonnes of urea a day from 1,300 tonnes of ammonia. But the outlook for urea prices is uncertain. It traded at $263 a tonne in the Middle East last week, compared with $770 a tonne at its peak on July 24 last year, the industry publication ICIS says. Backers of the project will hope the price cycle swings back up by the time the Ruwais plant comes on stream in 2013, but sceptics argue continued low prices will challenge the timing.

"There are a lot of question marks about when or if they will return to levels even half of where they were," one industry analyst said, asking not to be named. ADNOC has vowed to push on with energy investments to take advantage of lower costs in spite of continued weak demand for more oil and chemicals. In a speech in Moscow this week, Mohammed al Hamli, the Minister of Energy, reiterated the Government's stance on continuing energy investments. "Allow me to make the UAE's position very clear," Mr al Hamli said, according to a transcript of the speech.

"In spite of the uncertainty of global oil markets and the effects it could have on government revenue, we are committed to continue investing in both upstream and downstream sectors of the oil industry." [e-mail]