Adnoc’s downstream investment forum in May highlighted the new importance the company gives to this part of its business.
It attracted industry luminaries: the chief executives of BP; Total; Eni; HSBC; Mubadala Petroleum; Siemens; Occidental; the chairman of China National Petroleum Corporation; and the oil and energy ministers of the UAE, India and Egypt. Now Abu Dhabi needs to press on with the previously under-appreciated job of turning oil into refined fuels and petrochemicals.
In recent years, two key imperatives have made downstream expansion a key theme for national oil companies. The first is the desire to secure a market position in the world's main growth markets. The first is the desire to secure a market position in the world's main growth markets. While in BP's energy outlook, US oil use will fall 3 million barrels per day (bpd) and the EU's 4.3 million bpd by 2040, China's will rise 3.5 million bpd and the rest of Asia's by 8.6 million bpd.
The second is the concern that demand for transport fuels may be about to drop in the quite near term because of improving efficiency and the rise of electric vehicles. BP sees world oil use dropping after 2035, well within the investment horizon of a new refinery today, leaving petrochemicals as the only growing sector.
Other countries see the same trends, and regional competition is hotting up. Saudi Aramco is reportedly planning to buy some or all of the Public Investment Fund’s 70 per cent stake in Saudi Basic Industries Corporation (Sabic), the other state giant. Integrated operationally, this would reduce competition for feedstock, share overheads and ease Aramco’s task of building up its own petrochemical business. The two are already cooperating on an enormous, $20 billion, “crude-to-chemicals” plant at Yanbu’ that is intended to simplify petrochemicals by cutting out the intermediate refining step.
Iraq indicated last week that it would go ahead with Nebras, an $11bn petrochemical joint venture with Shell, with Aramco also in discussions to join. Iran has built up a large basic petrochemical industry sourced from its giant natural gas reserves, though many plants remain unfinished because of lack of financing. Private Egyptian company Carbon Holdings secured financing last month for a $10.9bn complex processing naphtha, a light product of oil refining.
But for the other GCC countries, the phase of making basic petrochemicals from cheap methane and ethane, the main constituents of natural gas, is giving way to a second stage focused on intermediate and speciality chemicals, such as synthetic rubber, adhesives and sealants, and plastic automobile and aviation components. More sophisticated technologies will create more related industries and employment. Integrated refineries and petrochemicals will share utilities, control rooms, maintenance and back-office functions; save on waste heat; and exchange feedstocks and intermediate products.
Abu Dhabi’s downstream sector has potential to grow – the Gulf Petrochemical Assocation assessed UAE 2016 petrochemical capacity as 13 million tonnes per year (Mtpa), compared with Saudi Arabia’s 106 Mtpa. Its new strategy has to close that gap.
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At home, it has reincarnated the decade-old Chemaweyaat plan, with a scheme to make Ruwais the world's largest integrated refining and petrochemicals complex, boosting Adnoc's petchems output from 4.5 Mtpa to 14.4 Mtpa by 2025. The centrepiece mixed-feed cracker will process a blend of ethane and naphtha.
Internationally, its first step is partnering with Aramco and Indian state firms in a giant new 18 Mtpa refining and petchems complex at Ratnagiri on India’s west coast. This new strategy carries several challenges. Mixed-feed crackers and speciality chemicals do not have the advantage of low-cost feedstock that drove the GCC’s first generation of plants, while the US has enjoyed a long period of low ethane prices because of its shale gas.
The Middle East end-product markets are fairly small and unintegrated, so most output will have to be marketed to Europe and Asia. As well as incurring transport costs, this also exposes sellers to the risk of tariff barriers if the world turns to protectionism.
In the longer term, the reliance on petchems is under environmentalist pressure. Single-use plastics, such as shopping bags and drinking straws, face bans as waste accumulates in the oceans. Recycling and bio-materials may shrink the industry’s use of hydrocarbons.
Abu Dhabi’s new strategy will rely on its competitive strengths: the UAE’s business-friendly environment, well-integrated logistics, access to finance, and attractiveness to international partners. Maximising the emirate’s existing assets is key: Mubadala already owns a large refining and petchem portfolio, including 64 per cent of Borealis which already partners Adnoc in Ruwais, and Europe-focused Spanish refiner Cepsa.
The Saudi plants’ operational performance and profitability are not particularly impressive. Learning from this, Adnoc will need to develop its skills in operating complex plants and marketing their products, a more involved task than selling crude oil. An integrated view of the industry’s complex product chains will point to products likely to be in under supply. It will need to develop research and innovation, and possibly consider select international acquisitions.
Although downstream is a crowded space with tough and experienced competitors, the imperative is clear. The range and rank of attendees at Adnoc’s forum is a testament to Abu Dhabi’s appeal. Swift, bold and capable execution will enable the company to stride ahead.
Robin Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis
Huddersfield Town permanent signings:
- Steve Mounie (striker): signed from Montpellier for £11 million
- Tom Ince (winger): signed from Derby County for £7.7m
- Aaron Mooy (midfielder): signed from Manchester City for £7.7m
- Laurent Depoitre (striker): signed from Porto for £3.4m
- Scott Malone (defender): signed from Fulham for £3.3m
- Zanka (defender): signed from Copenhagen for £2.3m
- Elias Kachunga (winger): signed for Ingolstadt for £1.1m
- Danny WIlliams (midfielder): signed from Reading on a free transfer
Biography
Favourite book: Zen and the Art of Motorcycle Maintenance
Holiday choice: Anything Disney-related
Proudest achievement: Receiving a presidential award for foreign services.
Family: Wife and three children.
Like motto: You always get what you ask for, the universe listens.
Analysis
Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
England-South Africa Test series
1st Test England win by 211 runs at Lord's, London
2nd Test South Africa win by 340 runs at Trent Bridge, Nottingham
3rd Test July 27-31 at The Oval, London
4th Test August 4-8 at Old Trafford, Manchester
The Uefa Awards winners
Uefa Men's Player of the Year: Virgil van Dijk (Liverpool)
Uefa Women's Player of the Year: Lucy Bronze (Lyon)
Best players of the 2018/19 Uefa Champions League
Goalkeeper: Alisson (Liverpool)
Defender: Virgil van Dijk (Liverpool)
Midfielder: Frenkie de Jong (Ajax)
Forward: Lionel Messi (Barcelona)
Uefa President's Award: Eric Cantona
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
Banned items
Dubai Police has also issued a list of banned items at the ground on Sunday. These include:
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Political flags or banners
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Bikes, skateboards or scooters
RESULTS
5pm: Sheikh Mansour bin Zayed Al Nahyan Racing Festival Purebred Arabian Cup Conditions (PA) Dh 200,000 (Turf) 1,600m
Winner: Hameem, Adrie de Vries (jockey), Abdallah Al Hammadi (trainer)
5.30pm: Sheikha Fatima bint Mubarak Cup Conditions (PA) Dh 200,000 (T) 1,600m
Winner: Winked, Connor Beasley, Abdallah Al Hammadi
6pm: Sheikh Sultan bin Zayed Al Nahyan National Day Cup Listed (TB) Dh 380,000 (T) 1,600m
Winner: Boerhan, Ryan Curatolo, Nicholas Bachalard
6.30pm: Sheikh Sultan bin Zayed Al Nahyan National Day Group 3 (PA) Dh 500,000 (T) 1,600m
Winner: AF Alwajel, Tadhg O’Shea, Ernst Oertel
7pm: Sheikh Sultan bin Zayed Al Nahyan National Day Jewel Crown Group 1 (PA) Dh 5,000,000 (T) 2,200m
Winner: Messi, Pat Dobbs, Timo Keersmaekers
7.30pm: Sheikh Mansour bin Zayed Al Nahyan Racing Festival Handicap (PA) Dh 150,000 (T) 1,400m
Winner: Harrab, Ryan Curatolo, Jean de Roualle
8pm: Wathba Stallions Cup Handicap (PA) Dh 100,000 (T) 1,400m
Winner: AF Alareeq, Connor Beasley, Ahmed Al Mehairbi
Key figures in the life of the fort
Sheikh Dhiyab bin Isa (ruled 1761-1793) Built Qasr Al Hosn as a watchtower to guard over the only freshwater well on Abu Dhabi island.
Sheikh Shakhbut bin Dhiyab (ruled 1793-1816) Expanded the tower into a small fort and transferred his ruling place of residence from Liwa Oasis to the fort on the island.
Sheikh Tahnoon bin Shakhbut (ruled 1818-1833) Expanded Qasr Al Hosn further as Abu Dhabi grew from a small village of palm huts to a town of more than 5,000 inhabitants.
Sheikh Khalifa bin Shakhbut (ruled 1833-1845) Repaired and fortified the fort.
Sheikh Saeed bin Tahnoon (ruled 1845-1855) Turned Qasr Al Hosn into a strong two-storied structure.
Sheikh Zayed bin Khalifa (ruled 1855-1909) Expanded Qasr Al Hosn further to reflect the emirate's increasing prominence.
Sheikh Shakhbut bin Sultan (ruled 1928-1966) Renovated and enlarged Qasr Al Hosn, adding a decorative arch and two new villas.
Sheikh Zayed bin Sultan (ruled 1966-2004) Moved the royal residence to Al Manhal palace and kept his diwan at Qasr Al Hosn.
Sources: Jayanti Maitra, www.adach.ae
Terminal High Altitude Area Defense (THAAD)
What is THAAD?
It is considered to be the US' most superior missile defence system.
Production:
It was first created in 2008.
Speed:
THAAD missiles can travel at over Mach 8, so fast that it is hypersonic.
Abilities:
THAAD is designed to take out projectiles, namely ballistic missiles, as they are on their downward trajectory towards their target, otherwise known as the "terminal phase".
Purpose:
To protect high-value strategic sites, such as airfields or population centres.
Range:
THAAD can target projectiles both inside and outside of the Earth's atmosphere, at an altitude of 93 miles above the Earth's surface.
Creators:
Lockheed Martin was originally granted the contract to develop the system in 1992. Defence company Raytheon sub-contracts to develop other major parts of the system, such as ground-based radar.
UAE and THAAD:
In 2011, the UAE became the first country outside of the US to buy two THAAD missile defence systems. It then deployed them in 2016, becoming the first Gulf country to do so.
The biog
Favourite Quote: “Real victories are those that protect human life, not those that result from its destruction emerge from its ashes,” by The late king Hussain of Jordan.
Favourite Hobby: Writing and cooking
Favourite Book: The Prophet by Gibran Khalil Gibran
Company profile
Name: Tharb
Started: December 2016
Founder: Eisa Alsubousi
Based: Abu Dhabi
Sector: Luxury leather goods
Initial investment: Dh150,000 from personal savings
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%3Cp%3E%3Cstrong%3EDirector%3A%C2%A0%3C%2Fstrong%3EHayao%20Miyazaki%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%C2%A0Soma%20Santoki%2C%20Masaki%20Suda%2C%20Ko%20Shibasaki%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E5%2F5%3C%2Fp%3E%0A
How Filipinos in the UAE invest
A recent survey of 10,000 Filipino expatriates in the UAE found that 82 per cent have plans to invest, primarily in property. This is significantly higher than the 2014 poll showing only two out of 10 Filipinos planned to invest.
Fifty-five percent said they plan to invest in property, according to the poll conducted by the New Perspective Media Group, organiser of the Philippine Property and Investment Exhibition. Acquiring a franchised business or starting up a small business was preferred by 25 per cent and 15 per cent said they will invest in mutual funds. The rest said they are keen to invest in insurance (3 per cent) and gold (2 per cent).
Of the 5,500 respondents who preferred property as their primary investment, 54 per cent said they plan to make the purchase within the next year. Manila was the top location, preferred by 53 per cent.
Dr Afridi's warning signs of digital addiction
Spending an excessive amount of time on the phone.
Neglecting personal, social, or academic responsibilities.
Losing interest in other activities or hobbies that were once enjoyed.
Having withdrawal symptoms like feeling anxious, restless, or upset when the technology is not available.
Experiencing sleep disturbances or changes in sleep patterns.
What are the guidelines?
Under 18 months: Avoid screen time altogether, except for video chatting with family.
Aged 18-24 months: If screens are introduced, it should be high-quality content watched with a caregiver to help the child understand what they are seeing.
Aged 2-5 years: Limit to one-hour per day of high-quality programming, with co-viewing whenever possible.
Aged 6-12 years: Set consistent limits on screen time to ensure it does not interfere with sleep, physical activity, or social interactions.
Teenagers: Encourage a balanced approach – screens should not replace sleep, exercise, or face-to-face socialisation.
Source: American Paediatric Association
South Africa World Cup squad
South Africa: Faf du Plessis (c), Hashim Amla, Quinton de Kock (w), JP Duminy, Imran Tahir, Aiden Markram, David Miller, Lungi Ngidi, Anrich Nortje, Andile Phehlukwayo, Dwaine Pretorius, Kagiso Rabada, Tabraiz Shamsi, Dale Steyn, Rassie van der Dussen.
The biog
Nickname: Mama Nadia to children, staff and parents
Education: Bachelors degree in English Literature with Social work from UAE University
As a child: Kept sweets on the window sill for workers, set aside money to pay for education of needy families
Holidays: Spends most of her days off at Senses often with her family who describe the centre as part of their life too
Funk Wav Bounces Vol.1
Calvin Harris
Columbia
