ABU DHABI (Zawya Dow Jones)
Abu Dhabi National Oil Co., the U.A.E.'s main crude oil producer, may decide next year whether to go ahead with the multi-billion-dollar upgrade of its Ruwais refinery, a company official said Monday.
The plans to expand the 420,000-barrel-a-day refinery and integrate it with a major petrochemicals complex are presently being studied by Adnoc's refining subsidiary Takreer, the official, who declined to be named, told Zawya Dow Jones.
"We consider this project seriously," the official said.
A final investment decision may be made in 2008, he said, adding that it was difficult to predict project cost at this stage.
If the project goes ahead it would see the country's largest refinery being integrated with several petrochemical units as part of Abu Dhabi's plans to broaden its industrial base.
"We have ambitious plans to expand the petrochemicals sector in this country," the official said.
Abu Dhabi Polymers Co., a joint venture between Adnoc and Vienna-based Borealis, is already operating petrochemical facilities at Ruwais, an industrial area located some 240 kilometers west of Abu Dhabi city.
Countries like Oman, Saudi Arabia and the U.A.E. are developing domestic petrochemical industries to diversify their economies away from oil and to create jobs for their young and growing populations.
Cheap gas has made Persian Gulf countries an attractive destination for investments in petrochemical industries, which are booming on the back of high global demand, especially from fast-growing markets in Asia.
A second refinery project, to be carried out by Abu Dhabi's International Petroleum Investment Co., or IPIC, in the U.A.E. emirate of Fujairah has been delayed after ConocoPhillips (COP) recently dropped out due to rising cost.
Project costs in the Middle East have soared as governments are spending their oil revenues on building and expanding industries and infrastructure, leading to a shortage of contractors, raw materials, equipment and qualified labor, which in turn has driven up prices.
The Fujairah refinery was originally anticipated to cost about $5 billion to build but industry estimates earlier this year put the price tag at more than double that amount.
Takreer will implement a scheduled maintenance program at the Ruwais refinery between Dec. 22 and Feb. 25, Adnoc said in September.
The U.A.E. is the fourth-largest producer in the Organization of Petroleum Exporting Countries, with daily output of around 2.6 million barrels.
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