How Abu Dhabi's Ruwais will become a global downstream centre

The town of Ruwais is located around 240 km west of Abu Dhabi City and is poised to experience rapid growth as Abu Dhabi National Oil Company (ADNOC) plans to inject some Dh165bn ($44.9bn) into its downstream industry, an investment that represents more than 40% of the company’s capital expenditure budget. ADNOC is aiming to ultimately transform Ruwais into the world’s largest integrated refinery and petrochemicals complex.

Imminent Transformation

The effects of further development of downstream energy infrastructure are expected to reverberate throughout the emirate’s economy, creating thousands of jobs and adding one point to GDP by 2025. Ruwais is currently home to approximately 25,000 people, many of whom are employees of ADNOC businesses or companies that provide related services. Working together with Italian energy multinational Eni and Austrian integrated oil and gas company OMV, ADNOC is preparing for a significant increase in its refining capacity by 2025, at which time its expanded facilities are expected to have a processing capacity of over 1m barrels per day (bpd). A crude flexibility project will also enable ADNOC’s refinery to handle grades that are more heavy than Abu Dhabi’s light sweet Murban crude oil, allowing it to process heavier crudes from the Upper Zakum field or imported heavy crude.

“Additional refining capacity and production output will allow us to increase exports – in particular exports to Asia,” Abdulla Naji Al Messabi, the acting CEO of ADNOC Refining, told OBG. “The refinery and its carbon black and delayed coker units have added significant deep conversion capacity, which allows low-value fuels to be upgraded into highvalue products,” Al Messabi added.

Petrochemicals Innovation

Plastics producer Borouge, a joint venture between ADNOC and Austrian firm Borealis, is moving forwards with plans to complete the fourth expansion of its petrochemicals complex located in Ruwais. In October 2019 The National newspaper reported that tenders for engineering, procurement and construction contracts were set to launch in mid-2020.

The development of the Borouge 4 project is widely expected to boost economic activity in Ruwais and generate thousands of new jobs, both during the construction phase and following the project’s completion. Upon becoming operational, the new facility is set to contribute to the development of Abu Dhabi’s downstream industry and support the emirate in becoming a centre of global petrochemicals innovation.

The town of Ruwais, located 240 km to the west of Abu Dhabi City, is targeted to become the world’s largest integrated refinery and petrochemicals complex In February 2019 ADNOC awarded UK-headquartered energy services company Wood Group the pre-front-end engineering and design contract for a new 600,000-bpd refinery at Ruwais. The plant is set to have full conversion capabilities, allowing it to be integrated with petrochemicals facilities. In February 2019 Borouge also awarded front-end engineering and design (FEED), project-management and licensing contracts for the fourth phase of the Ruwais petrochemicals complex.

The Borouge 4 facility is expected to help meet rising demand for polyolefins in many key international markets. The project forms part of ADNOC’s strategy to add value to its downstream industry. Borouge has also progressed in the construction of its fifth polypropylene unit at its Borouge 3 plant in Ruwais. Scheduled to become operational in 2021, the 480,000-tonne-per-year unit will increase Borouge’s polypropylene capacity by 25% to 2.24m tonnes per year and increase its total polymer capacity by 11% to reach 5m tonnes per year.

Derivatives Park

A key component of the Ruwais expansion plan is the development of a 2.5-sq-km derivatives park, in which industrial companies will be able to use feedstock from the integrated facility in their manufacturing processes in order to create high-value products such as packaging, coatings, flooring, insulation materials and automotive parts. ADNOC hopes that the construction of the derivatives park will both act as a catalyst for the company’s petrochemicals growth plan and help to establish a new, large-scale manufacturing ecosystem in the town of Ruwais that will support both large and small businesses.

In December 2018 ADNOC and Spanish multinational energy company Cepsa awarded the FEED contract for the construction of a new factory to produce linear alkyl benzene (LAB), a major component in the manufacture of biodegradable detergents. The contract was awarded to Madrid-based engineering firm Técnicas Reunidas, and the plant is set to produce 225,000 tonnes of normal paraffins and 150,000 tonnes of LAB per year. ADNOC is also in the process of developing the Ruwais Conversion Park, which will be located adjacent to the derivatives park, with the objective of creating new businesses further down the petrochemicals value chain.

As of June 2020 relatively few details had been revealed about the project; however, in October 2019 The National reported that the park is set to cover approximately 3.5 sq km upon completion and will include a number of different industry clusters, enabling companies to make use of the derivatives produced at the adjacent facility.

International Deals

Throughout 2019 ADNOC signed a number of framework agreements and memoranda of understanding with international firms; the collective aim of these agreements was to establish a network of businesses at the new petrochemicals complex by the time the expanded refining and cracking facilities come on-line in 2025. In December 2019 ADNOC signed an agreement with Indian conglomerate Reliance Industries to evaluate the potential construction of an ethylene dichloride (EDC) plant in Ruwais. EDC is one of the building blocks of PVC, and is used to make a variety of plastic and vinyl products. Demand for PVC is expected to soar as it remains a key material in the housing and agriculture sectors, and the Indian vinyl market is particularly poised to see an acceleration in growth in the coming years.

“This cooperation ideally combines the advantaged feedstock and energy from the UAE with Reliance’s execution capabilities and the growing Indian market,” Nikhil Meswani, executive director of Reliance, said in an announcement of the deal.

In November 2019 ADNOC signed an agreement with China’s Rongsheng Petrochemical to explore more downstream investment opportunities. The deal is poised to increase the volume of refined products supplied by ADNOC to Rongsheng, in addition to expanding ADNOC’s participation in Rongsheng’s refining and petrochemicals activity. The Chinese firm also expressed interest in the downstream complex in Ruwais, including the proposed petrol and aromatics facilities.

Market Dynamics

The market for petrochemicals on the continent of Asia is expected to double by 2040, and the region will account for two-thirds of new global demand over the next two decades. Thus, the region is playing an important role in Abu Dhabi’s petrochemicals export strategy. The development of partnerships in the large growth markets of India and China should help to secure the future of Ruwais as a major refining and petrochemicals complex and provide more opportunities fro Emirati companies to unlock greater profits further down the value chain. However, in other parts of the world, cracking and refining facilities have often been located closer to consumer markets.

Nevertheless, sector players remain confident that Ruwais will be able to compete with other facilities, provided that its services are efficient. “An important factor in ensuring the success of Ruwais is making sure the right partnerships are in place that will be able to facilitate the implementation of technology at a local level,” Philippe Peccard, managing director of Linde Engineering Middle East, told OBG. “This will in turn help increase the efficiency of the local industry, allowing it to compete not only regionally, but also internationally.”

Industrial Centre

Given the level of investment in the facilities located in and around Ruwais, sector stakeholders in Abu Dhabi predict that the town will likely develop rapidly into a significant industrial centre. “Ruwais represents a great opportunity for investment and there is a lot of focus on this region,” Ali Al Janabi, vice-president and chairman of Shell Abu Dhabi, told OBG. “In addition to the refinery and petrochemicals centre, it is anticipated that Ruwais will see growth in many other sectors such as industry, education, health and transport.”

Others are confident that the town will experience organic growth and facilitate the emergence of new small businesses. “ADNOC is expecting significant private investment in petrochemicals, with a range of firms taking its feedstock. These conversion and manufacturing companies will need core teams of experts in Ruwais, many of whom will move there with their families,” Toufic Farah, operations director for local oil and gas firm NAMA Development Enterprises, told OBG. “As this happens, the nature of the city will change. Within a decade Ruwais may become similar in size to Jubail in Saudi Arabia.”