Dubai to set up oil refinery

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Dubai to set up oil refinery

Dubai has signed an agreement with China Sonangol International to set up a state-of-the-art refinery.

By Issac John

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Published: Fri 27 Sep 2013, 9:53 AM

Last updated: Tue 7 Apr 2015, 8:25 PM

Shaikh Ahmed and Sam Pai at the signing ceremony of the planned oil refinery project in Dubai. Also present are: Hussain Al Qemzi, group CEO, Noor Investment group; Dr Ahmed Al Janahi, DeputyGroup CEO, Noor Investment group; Alain Fanaie, CEO, China Sonangol International, and Saadaat Yaqub, head — Debt Capital Markets and FI, Investment Banking, Noor Islamic Bank. — Supplied photo

Shaikh Ahmed bin Saeed Al Maktoum, Chairman of the Dubai Supreme Council of Energy and President of Dubai Civil Aviation Authority, has signed the memorandum of understanding (MoU) with Sam Pai, chairman, China Sonangol Group, Dubai government said in a statement on Thursday.

The agreement mandates China Sonangol International to set up a crude oil refinery that would process end products for domestic use as well as international markets, the statement said.

The statement, however did not give any indication of the capacity or cost of the refinery project.

To oversee the front-end engineering design, green-field project financing and process flow management, Dubai will set up a project consortium. “With upstream and downstream oil and gas operations in Asia and Africa, China Sonangol will bring its expertise and resources in mobilising the project consortium,” said the statement.

Noor Investment Group would act as the financial advisor to Dubai Supreme Council of Energy. “The initiative marks yet another step by the Dubai Government to address the increasing energy requirements,” it said. “The setting up of the refinery comes at a time when the country’s non-oil economy is forecast to expand 4.5 per cent in 2013, the fastest pace since 2008 according International Monetary Fund estimates. Fitted out with advanced technology, the refinery will seek to ensure the sustained supply of refined end products for the emirate’s future energy consumption while further augmenting Dubai’s export portfolio,” the statement said.

Established in 2004, China Sonangol is a joint venture between Angola’s state-owned oil company, Sonangol E.P. and Hong Kong-based New Bright International Development. The company started off with oil and gas, minerals and reconstruction projects in Africa and diversified into other areas of businesses such as real estate and transportation projects globally.

Headquartered in Hong Kong, China Sonangol has offices in across Africa and Asia and has several oil production projects in Angola and one in Indonesia.

The new refinery will give a further boost to the total refining capacity of the UAE even as Abu Dhabi, a major oil producer of the region, has been pressing ahead with plans to raise oil output capacity to 3.5 million barrels a day to supply foreign buyers and feed an expanded local refinery.

Abu Dhabi’s capacity is presently at 2.8 million barrels a day.

Already, Adnoc’s refinery in Ruwais Takreer (Abu Dhabi Oil Refining Company) is set to double processing capacity at its 400,000 barrel-a-day plant by the end of 2014.

The $10 billion Ruwais refinery expansion project seeks to add 417,000 barrels per day of refining capacity.

Other refining projects in the UAE include that of the International Petroleum Investment Company, which is going ahead with its 200,000 bpd refinery in Fujairah.

The refinery is expected to cost $3 billion and may be completed by 2017.

A second phase to add petrochemical units is expected to follow.

When these projects are completed, the refining capacity in the UAE may exceed 1.35 million bpd considering the refineries of Umm Al Nar (150,000 bpd), Dubai (120,000 bpd) and the current Fujairah (80,000 bpd).

By 2017, the UAE may be refining close to 50 per cent of its crude oil production and will become a major petroleum products exporter, according to available data.

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