Integration nationDecember 13, 2017
Jasem Al Sayegh, the CEO of ADNOC Refining, (formerly known as Abu Dhabi Oil Refining Company, or Takreer), talks to TOGY about ADNOC’s strategy, increasing the value of downstream operations, and co-ordination between the NOC’s subsidiaries. ADNOC Distribution debuted on the Abu Dhabi stock exchange Wednesday, opening at AED 2.90, 16% above the IPO price. ADNOC Distribution priced its shares at AED 2.50 (USD 0.68) Friday, raising AED 3.1 billion (USD 851 million) for the marketing arm of Abu Dhabi’s NOC. The IPO is part of a wider strategy by ADNOC to form new partnerships and attract a wide variety of investors.
• On expansion: “A key pillar of [ADNOC’s] strategy is a more valuable downstream. This includes delivering more efficient operations, while also pursuing opportunities for growth.”
• On co-operation: “One important consideration is that we maximise synergy between ADNOC subsidiaries in order to deliver the greatest possible efficiencies.”
• On markets: “With the new refinery, our ability to produce winter-grade products, or Euro 5 products, will enable greater penetration of European markets.”
• On upcoming projects: “We are exploring a new project for the processing of offshore crude, known as POCP. This would allow ADNOC to export more of the sweet and lighter crudes, which we are currently processing, and instead process heavier offshore crude.”
Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find an abridged version of our conversation with Jasem Al Sayegh below.
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ADNOC has announced that it wants to triple petrochemicals output and increase its refining capacity by 2025, which will rely a lot on ADNOC Refining. How can this be achieved?
One important consideration is that we maximise synergy between ADNOC subsidiaries in order to deliver the greatest possible efficiencies. As an example, we are now in the FEED stage for a petrol and aromatics project. Our focus is on working closely together and ensuring that when we deliver, we do so taking into account any potential opportunities for integration and synergy.
As another example of this, in 2008, Borouge 3 and the new refinery were designed to be integrated from the FEED stage, and this benefited both of us in the end. We import hydrogen from Borouge and we export propylene to them. It reduced opex as well as some capex to both entities.
What are the opportunities for expansion?
In November 2016, ADNOC announced its 2030 smart growth strategy; a key pillar of this strategy is a more valuable downstream. This includes delivering more efficient operations, while also pursuing opportunities for growth. For example, we are exploring a new project for the processing of offshore crude, known as POCP. This would allow ADNOC to export more of the sweet and lighter crudes, which we are currently processing, and instead process heavier offshore crude.
As a refiner, if you process heavier crudes you can increase your margin, because heavier crudes are less expensive. In addition to the POCP, we are currently concluding a project for heavy oil conversion, the Carbon Black Delayed Coker [CBDC] Project. This project will allow us to convert heavy oil into lighter products, speciality products used in the aluminum industry, or products for our sister company Borouge. For example, the carbon black can be used in manufacturing pipes and cables. The CBDC project will also lead us to be IMO [International Maritime Organisation]-compliant with regulations expected in 2020 concerning the content of sulphur in bunker fuel. When it is fully commissioned and operational our facility, one of the very first such facilities in the world, will be able to produce 0.5% sulphur fuel.
Could you describe the geographical spread of your product sales?
The majority of our products go to the Far East. But with the new refinery, our ability to produce winter-grade products, or Euro 5 products, will enable greater penetration of European markets. Naphtha mainly goes to the East, to [South] Korea and Japan, we [ADNOC] are working with Penthol to sell base oil into the United States, and a limited number of our products currently go to Africa.
To what extent do you meet domestic demand?
We provide ADNOC Distribution, our sister company, with a range of products for sale in the domestic market. Overall, around 65% of our total production is exported and 35% is used by the local market.
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