Wide profit margins for oil refiners are coming to an end along with the world's appetite for oil, experts say, marking the end to a long boom in the downstream oil industry.
The downturn comes just as the UAE is set to double its refining capacity and could slow the country's efforts to diversify its oil and gas industry away from simple crude oil exports.
Moody's Investors Service, the global credit rating firm, changed its outlook for the world's refining sector from "stable" to "negative" on Friday, citing slowing world demand for oil products and a forecasted glut of spare refining capacity.
"While cyclicality is built into our refining outlooks, the move to a negative outlook stems from demand changes that appear to be structural and enduring," said Andrew Oram, a senior credit officer for Moody's.
That is bad news for the UAE, which is in the midst of expanding its refinery at Ruwais and studying the feasibility of building a refinery in Fujairah. Together, the two export-orientated projects would add 617,000 barrels per day (bpd) to the country's current refining capacity of 628,000 bpd.
Moody's predicted refiners would now on average earn US$10 (Dh36.76) for every barrel of crude oil they converted into usable products like diesel and jet fuel, compared with an average of close to $20 earlier this year.
The downturn marks the end of a long boom period for refiners that began in 2003 as world demand for diesel and other products took off, said Raja Kiwan, an analyst for PFC Energy who is based in Dubai.
As demand for transportation fuels began to increase in Asia in line with the economic boom, existing refining capacity was strained, and refinery margins - determined by the difference between crude prices and the prices of consumer products like petrol and diesel - widened markedly.
"All of a sudden, everyone jumped on the bandwagon," Mr Kiwan said. "Everyone wanted to build a refinery."
Chief among those projects was Reliance Petroleum's 580,000 bpd facility in India, which is expected to come online in December. Together with an existing facility, it will form the largest refinery complex in the world.
During this year and the next, 2.5 million bpd of refining capacity will be added around the world, according to Goldman Sachs.
But those projects, which have taken years to move from the conceptual phase to construction, are now threatening to flood the market with a glut of extra capacity just as growth in demand for all oil products slows in line with a weakening global economy.
Mr Kiwan said it was impossible to predict how long the downwards cycle would last, but Gulf refiners may be insulated from the downturn to some degree because domestic demand for refined products is booming and refining units are part of larger state oil firms.
According to PFC's estimates, the UAE's demand for oil products will increase by five per cent next year, to 307,000 bpd. Saudi Arabia, long the world's top oil exporter, became the fastest growing oil consumer this year, and will see oil product demand increase by seven per cent next year, to 1.79 million bpd.
"Margins are going to be tighter across the board, but the Middle East is a little bit different," said Mr Kiwan.
Large facilities in the works in the region include two export-orientated refineries in Saudi Arabia, a refinery in Kuwait and the Abu Dhabi National Oil Company's (Adnoc) refinery expansion at Ruwais, which is scheduled to be completed by 2014 and will add 417,000 bpd to Adnoc's refining capacity.
The bad news for refiners comes just as petrochemical companies are steeling themselves for a tough downwards cycle also caused by a glut of capacity in the medium term.
Huge new plastics complexes are under construction in the region that will outstrip growth in world demand.
Ahmed Albassam, the director of business development for Tasnee, a Saudi petrochemicals firm, told a conference in Dubai last week that petrochemical companies should brace for a tough period of lower product prices and consolidation in the industry.
"Supply will outstrip demand significantly," he said. "There will be a lot of competition in this area."
Abu Dhabi is also investing billions into expanding a plastics facility at Ruwais, and studying building a third plant by 2014 that would double production capacity.
Roy Vardheim, the chief operating officer for Borouge, Adnoc's petrochemical arm, said the new plant would have access to low-cost feedstock and achieve enough economy of scale to keep costs low and survive the downturn.
cstanton@thenational.ae
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RACE CARD
6.30pm: Handicap (TB) $68,000 (Dirt) 1,600m
7.05pm: Meydan Sprint – Group 2 (TB) $163,000 (Turf) 1,000m
7.40pm: Curlin Stakes – Listed Handicap (TB) $88,000 (D) 2,200m
8.15pm: UAE Oaks – Group 3 (TB) $125,000 (D) 1,900m
8.50pm: Zabeel Mile – Group 2 (TB) $163,000 (T) 1,600m
9.25pm: Balanchine – Group 2 (TB) $163,000 (T) 1,800m
10pm: Al Shindagha Sprint – Group 3 (TB) $130,000 (D) 1,200m
Thor%3A%20Love%20and%20Thunder%20
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Taika%20Waititi%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Chris%20Hemsworth%2C%20Natalie%20Portman%2C%20Christian%20Bale%2C%20Russell%20Crowe%2C%20Tessa%20Thompson%2C%20Taika%20Waititi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
Results
2.30pm: Expo 2020 Dubai – Conditions (PA) Dh80,000 (Dirt) 1,600m; Winner: Barakka, Ray Dawson (jockey), Ahmad bin Harmash (trainer)
3.05pm: Now Or Never – Maiden (TB) Dh82,500 (Turf) 1,600m; Winner: One Idea, Andrea Atzeni, Doug Watson
3.40pm: This Is Our Time – Handicap (TB) Dh82,500 (D) 1,600m; Winner: Perfect Balance, Tadhg O’Shea, Bhupat Seemar
4.15pm: Visit Expo 2020 – Handicap (TB) Dh87,500 (T) 1,600m; Winner: Kaheall, Richard Mullen, Salem bin Ghadayer
4.50pm: The World In One Place – Handicap (TB) Dh95,000 (T) 1.900m; Winner: Castlebar, Adrie de Vries, Helal Al Alawi
5.25pm: Vision – Handicap (TB) Dh95,000 (D) 1,200m; Winner: Shanty Star, Richard Mullen, Rashed Bouresly
6pm: Al Wasl Plaza – Handicap (TB) Dh95,000 (T) 1,200m; Winner: Jadwal, Dane O’Neill, Doug Watson
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
COMPANY%20PROFILE%20
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COMPANY PROFILE
Name: Rain Management
Year started: 2017
Based: Bahrain
Employees: 100-120
Amount raised: $2.5m from BitMex Ventures and Blockwater. Another $6m raised from MEVP, Coinbase, Vision Ventures, CMT, Jimco and DIFC Fintech Fund
Company%20profile%20
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Scores
Scotland 54-17 Fiji
England 15-16 New Zealand
RACECARD
4.30pm Jebel Jais – Maiden (PA) Dh60,000 (Turf) 1,000m
5pm: Jabel Faya – Maiden (PA) Dh60,000 (T) 1,000m
5.30pm: Al Wathba Stallions Cup – Handicap (PA) Dh70,000 (T) 2,200m
6pm: The President’s Cup Prep – Conditions (PA) Dh100,000 (T) 2,200m
6.30pm: Abu Dhabi Equestrian Club – Prestige (PA) Dh125,000 (T) 1,600m
7pm: Al Ruwais – Group 3 (PA) Dh300,000 (T) 1,200m
7.30pm: Jebel Hafeet – Maiden (TB) Dh80,000 (T) 1,400m
More from Neighbourhood Watch:
Results
Final: Iran beat Spain 6-3.
Play-off 3rd: UAE beat Russia 2-1 (in extra time).
Play-off 5th: Japan beat Egypt 7-2.
Play-off 7th: Italy beat Mexico 3-2.
What is double taxation?
- Americans living abroad file taxes with the Internal Revenue Service, which can cost hundreds of dollars to complete even though about 60 per cent do not owe taxes, according to the Taxpayer Advocate Service
- Those obligations apply to millions of Americans residing overseas – estimates range from 3.9 million to 5.5 million – including so-called "accidental Americans" who are unaware they hold dual citizenship
- The double taxation policy has been a contentious issue for decades, with many overseas Americans feeling that it punishes them for pursuing opportunities abroad
- Unlike most countries, the US follows a citizenship-based taxation system, meaning that Americans must file taxes annually, even if they do not earn any income in the US.
The specs
Engine: 3.8-litre V6
Power: 295hp at 6,000rpm
Torque: 355Nm at 5,200rpm
Transmission: 8-speed auto
Fuel consumption: 10.7L/100km
Price: Dh179,999-plus
On sale: now
UAE currency: the story behind the money in your pockets
COMPANY%20PROFILE
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City's slump
L - Juventus, 2-0
D - C Palace, 2-2
W - N Forest, 3-0
L - Liverpool, 2-0
D - Feyenoord, 3-3
L - Tottenham, 4-0
L - Brighton, 2-1
L - Sporting, 4-1
L - Bournemouth, 2-1
L - Tottenham, 2-1
Oscars in the UAE
The 90th Academy Awards will be aired in the UAE from 3.30am on Monday, March 5 on OSN, with the ceremony starting at 5am
THREE
%3Cp%3EDirector%3A%20Nayla%20Al%20Khaja%3C%2Fp%3E%0A%3Cp%3EStarring%3A%20Jefferson%20Hall%2C%20Faten%20Ahmed%2C%20Noura%20Alabed%2C%20Saud%20Alzarooni%3C%2Fp%3E%0A%3Cp%3ERating%3A%203.5%2F5%3C%2Fp%3E%0A
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
Company%20Profile
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3ENamara%0D%3Cbr%3E%3Cstrong%3EStarted%3A%20%3C%2Fstrong%3EJune%202022%0D%3Cbr%3E%3Cstrong%3EFounder%3A%20%3C%2Fstrong%3EMohammed%20Alnamara%0D%3Cbr%3E%3Cstrong%3EBased%3A%20%3C%2Fstrong%3EDubai%20%0D%3Cbr%3E%3Cstrong%3ESector%3A%20%3C%2Fstrong%3EMicrofinance%0D%3Cbr%3E%3Cstrong%3ECurrent%20number%20of%20staff%3A%20%3C%2Fstrong%3E16%0D%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%20%3C%2Fstrong%3ESeries%20A%0D%3Cbr%3E%3Cstrong%3EInvestors%3A%20%3C%2Fstrong%3EFamily%20offices%0D%3Cbr%3E%3C%2Fp%3E%0A
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Killing of Qassem Suleimani
Managing the separation process
- Choose your nursery carefully in the first place
- Relax – and hopefully your child will follow suit
- Inform the staff in advance of your child’s likes and dislikes.
- If you need some extra time to talk to the teachers, make an appointment a few days in advance, rather than attempting to chat on your child’s first day
- The longer you stay, the more upset your child will become. As difficult as it is, walk away. Say a proper goodbye and reassure your child that you will be back
- Be patient. Your child might love it one day and hate it the next
- Stick at it. Don’t give up after the first day or week. It takes time for children to settle into a new routine.And, finally, don’t feel guilty.
How Sputnik V works
