Abu Dhabi Oil Producer May Invest in First Overseas Refineries

Updated on
  • Adnoc plans $109 billion in capital expenditure over 5 years
  • Gulf oil producers seek assets abroad to secure crude buyers

An Adnoc petrol station in Dubai on Sept. 25, 2017.

Photographer: Tom Dulat/Getty Images

Abu Dhabi’s state oil producer may build or buy into refining and petrochemical businesses outside the United Arab Emirates, making its first international investments as it seeks to strengthen ties with customers for its crude.

Abu Dhabi National Oil Co. plans capital spending of 400 billion dirhams ($109 billion) over the next five years, Abu Dhabi Crown Prince Mohamed bin Zayed Al Nahyan said Monday on Twitter. Some of that could be channeled into plants abroad, while Adnoc also intends to start producing unconventional gas -- which is drilled from rocks that are hard to access -- by 2030.

“Adnoc will expand its portfolio through strategic international downstream investments, and develop Abu Dhabi’s unconventional gas resources,” the Crown Prince tweeted after a meeting of the Supreme Petroleum Council, the emirate’s highest policy-making body for the oil industry.

By investing outside the U.A.E., Abu Dhabi would join other Persian Gulf crude producers and OPEC members seeking to ensure long-term demand for their oil as they grapple with competing supplies, including U.S. shale output. Saudi Arabia and Kuwait are investing in refineries and chemical plants in China and Vietnam, while Venezuela owns U.S. refiner and gas-station operator Citgo Petroleum Corp.

Asian Footprint

Abu Dhabi, which holds about 6 percent of the world’s crude reserves, sells most of its oil to Asia, and Adnoc wants to increase its footprint in the region.
 
“We might be considering our own investments in the downstream business in Asia, meaning more refining capacity or more petrochemicals,’’ Chief Executive Officer Sultan Al Jaber said in an interview in Abu Dhabi on Nov. 13.

Adnoc is also expanding beyond its traditional role of pumping and exporting crude by seeking to sell stakes in some units, exploring the creation of a trading business and bringing new partners and investors into its U.A.E. operations.

The company has about 900,000 barrels a day of refining capacity, mainly at Ruwais on the Gulf coast. It plans to build a new refinery of about 600,000 barrels a day at the same location to become self-sufficient in fuel and produce enough for export, Abdulaziz Alhajri, director of Adnoc’s downstream directorate, said this month.

The Organization of Petroleum Exporting Countries is set to meet on Thursday to consider extending global production cuts beyond March in an effort to clear a glut and keep prices firm. The U.A.E. is OPEC’s fourth-largest producer.

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