Al Azdi. © Gulf News |
"With present capacity being over 500,000 bpd, there are no plans to increase refining capacity," an Adnoc official told Gulf News on the sidelines of the Third Oil Refining and Petrochemicals in the Middle East Conference yesterday.
The Umm Al Nar refinery is operating steadily at above 90,000 bpd and the Ruwais refinery at over 140,000 bpd.
In addition, the combined Umm Al Nar and Ruwais refinery capacity is currently 280,000 bpd after the commissioning of two 140,000 bpd condensate splitter units to process onshore Thammama and Asab Condensate obtained from gas development projects, he said.
Earlier, Mohammed Abdullah Al Azdi, manager, chemicals operations coordination division, Adnoc told the conference that although only some 8 per cent of the global crude oil is refined in the Middle East (despite having 65 per cent of global crude oil reserves), this region will expand its share of refined products exports in the next two decades.
"Growth of capacity is restrained in the region due to low regional demand and global oversupply of refining capacity," he said, adding that no grassroot refineries have been added in the region since the mid-80s.
Contrastingly, the developmental pace of the petrochemicals industry has been dramatic in the region, with the Middle East accounting for around 16 per cent of global ethylene capacity by 2010 from the current 8 per cent.
However, Al Azdi said the challenge for the Middle East is consolidation and exposure to one single market, namely China.
"The petrochemicals industry outside the Middle East is consolidating rapidly with mergers taking place. The region sells little to the domestic market and is heavily reliant on exports to one market, China."
In order to maximise profitability, greater integration is needed between the refining and petrochemicals industry with purpose-built sites required for this, Al Azdi added.
Phil Hunt, principal, Chem Systems, UK, urged Middle East countries to be more flexible and responsive to market conditions, noting that the region will remain a pivotal area for refined products.
"Economic uncertainties in Asia and fragmentation of product quality are the main threats to this region. But there are opportunities such as global access, the power-petrochemicals industry integration and growth in Asia which the region should cash in on," he said.
The large crude reserves, large refineries and excellent export logistics are the major strenghts of this region but its weaknesses include modest local demand, ongoing investment needs and moderate complexity, he added.
Hunt said the $18-25 per barrel price range for crude is a "comfortable operating range which will be bridged from time to time."
Prices will continue to be volatile but when prices touch $10 the whole industry suffers and such a price is not in the interest of consumers or producers. Similarly, a $30 price is not sustainable, he said.
