Adnoc puts Ruwais at heart of UAE’s future
City in Al Dhafra to receive huge investment as part of country’s bid to become a world leader in chemicals
Abu Dhabi National Oil Company is set to unveil plans today that will turn its existing facilities in Ruwais into the world’s largest integrated refining and petrochemicals operation.
The complex is already the world’s fourth largest in terms of capacity but once these plans are complete it will outsize the huge refinery in Jamnagar, western India.
Today in Abu Dhabi, Adnoc Group chief executive Dr Sultan Al Jaber will reveal the company’s plans for growth including a massive investment programme for Ruwais to become a world leader in the petrochemicals industry.
This will mean more jobs, the broadening of the economic base beyond just direct oil revenues, and the transfer of intellectual and technological talent and capital to the UAE.
To show the potential of Ruwais, with its close proximity to cheap oil to feed its refineries and to the biggest customers in Asian nations such as China, Adnoc is hosting dozens of the world’s top chief executives at a conference in the capital today.
Those who have been invited to hear about the future of Ruwais include Occidental’s chief executive and president Vicki Hollub, Sanjiv Singh of Indian Oil, Yang Wilin, the chairman of the China National Petroleum Corporation, and HSBC’s chief executive John Flint.
“This is Ruwais filter,” our guide Saeed said as we took pictures on a hillock overlooking a quiet expanse of cityscape under the hazy horizon of Abu Dhabi’s Al Dhafra.
Industrial monuments loom over sandy Arabesque mid-rise compounds and tall steely cylinders frame a landscape that when lit up at night presents a fantastic picture of the epicentre of Abu Dhabi’s hydrocarbons industry in its full glory.
“In the night, we have the best view from here, we call this the Manhattan of Ruwais,” said Saeed, an employee of the Abu Dhabi National Oil Company who was given the job of showing The National around the city, which is 240 kilometres away from the capital.
Growing almost discreetly in scale, Ruwais, which sprung from Abu Dhabi’s need to refine the oil spudded out of the ground in the 1970s, spreads across 7 square kilometres of hilly outcrop, surrounded all around by sparse, hardy desert plant life and little else.
Here, the UAE, which produces 6 per cent of the world’s oil, is developing the world’s largest integrated refining and petrochemicals plant, to meet growing demand globally for fuel and the complex chemicals from which plastics are made.
Adnoc, which produces and sells crude on behalf of the Emirate, is seeking to add to its existing plant in Ruwais, which is already the world’s fourth largest in terms of capacity, at 922,000 barrels per day.
Once these plans are complete the Ruwais operation will outsize the 1.24 million bpd refinery in Jamnagar in western India, which is now the world’s largest.
The Indian refinery is a massive feat of engineering, stretching across an acreage that would cover a third of London. Its pipes, if laid one after another, would span the whole of India from the north to the south.
Abu Dhabi’s ambitions are truly world-scale and come at a time when refinery towns mean big business in the Middle East. The days of newly nationalised oil companies being content with pumping crude and selling to the oil markets are long gone.
Oil companies in the Middle East today are changing their business models to move further down the value chain of the industry. Oil, which apart from being turned into petrol, undergoes further transformation in refineries to yield high-demand products including aviation fuel, diesel, heating oil and naphtha.
Some of these products are used as raw materials in petrochemicals plants that are now integrated with refineries to create highly sophisticated products such as different grades of plastics and chemicals that go into a range of everyday products, from varnish to laundry detergent.
Energy’s transformative effect can be seen in Ruwais. Once a fishing village, the city now has 24,000 people in the Ruwais Housing Complex built by Adnoc. There are three futuristically modelled sports and recreation units, their plastic and steel facades glittering under the sun.
Eight schools have opened offering various curriculums to children of Adnoc employees. The city also has a state university with separate campuses for men and women.
Porsches are parked outside of Ruwais’s 261-shop mall, which opened in 2014, and the city has a hospital operated by NMC Healthcare.
Urban development in this remote outpost of Abu Dhabi has come amid strategies pushed by Adnoc to develop the emirate’s refining and chemicals sector – collectively referred to as downstream.
Adnoc established itself in the 1970s as a national oil company primarily engaged in exploration and production of oil and gas, known as upstream, across vast swathes of Abu Dhabi desert as well as offshore of the emirate.
The state company has over the past few years set its eyes on becoming an integrated oil company, combining upstream, downstream and distribution assets, known in industry jargon as midstream, under a unified branding last year.
The downstream segment of the energy industry has traditionally had little appeal for international oil companies.
“Historically, the Seven Sisters – the major oil companies – didn’t invest in refining, it was all about upstream, getting crude to market,” says Tyler Priest, associate professor of history and geographical and sustainability sciences at the University of Iowa.
The Seven Sisters, modern day forerunners of BP, Chevron and Exxon, which explored and produced oil in the early part of the 20th century in the Middle East, had to relinquish their
investments in the region after independence and nationalisation movements in the 1970s.
The newly formed national oil companies decided to take matters into their own hands and invest in refining. But the integration with chemicals as seen in the plants being built in Ruwais or the multibillion-dollar investments Saudi Aramco is pouring into its western and eastern coasts are fairly recent.
“The integration of refining and petrochemicals is not something new, it’s been there for decades but in the Middle East however, it somehow started in 1985 when Saudi Arabia started to produce aromatics at its Sasref refining complex in Jubail,” says Iman Nasseri, regional managing director at Facts Global Energy.
“What achieved a step change is the new set of projects being commissioned in this region is that all of them are being designed from the scratch as integrated plants.”
The pivot towards building such integrated structures came at a time of large-scale socio-economic changes sweeping across Asia. In the 1980s, China began its shift towards a more capitalist system, industrialising rapidly and spurring the growth of a large consuming middle class.
India, on the urging of the IMF in the early 1990s, began liberalising its economy and opened up to foreign investors. The newly nationalised oil companies of the Middle East now found an opportunity to sell more than just barrels of oil to large-scale refineries in these economies. They could actually become the manufacturers of products.
“It made more sense because they cut down logistics and planning, and as the owner of the two parts of the business they tried to optimise [refining and chemicals] by placing them next to each other and creating synergies in terms of operations and other costs,” Mr Nasseri says.
Today, in Abu Dhabi, Adnoc’s group chief executive Dr Sultan Al Jaber will reveal the company’s plans for downstream growth including a massive investment programme for Ruwais to become a world leader in the industry.
This will mean more jobs, the broadening of the economic base beyond just direct oil revenues and the transfer of intellectual and technological talent and capital to the UAE.
To show the potential of Ruwais, given its advantages in terms of geographical proximity to cheap oil to put in its refineries and the biggest customers in Asian nations such as China, Adnoc is hosting dozens of the world’s top chief executives at a conference in the capital today. This is part of the company’s push to become a more commercially driven and dynamic institution.
Ruwais and the development of its facilities finds resonance across the region, where countries are trying to spur growth in remote locations, often with access to ports and turn cities into multibillion-dollar investment landscapes.
Refinery towns have become the new champions of economic development in petro-economies of the Middle East looking to slowly wean themselves away from their reliance on the sale of barrels of crude.
“In the 1920s and 1930s, oil in America was being drilled in some of the poorest regions of the country, so to get a job with a company that had a town was a dream for many Americans as the towns included basic services, water, electricity and also social amenities, community halls, churches, recreational sites,” says Darren Dochuk, associate professor of history at the University of Notre Dame.
“So for the first half of the 20th century, you had these community towns that were prospering in quite dramatic ways. Meanwhile, in kind of larger refining centres such as the southern part of Texas along the Gulf, you were getting that same effect but on a larger scale and on a more permanent scale.
“Typically, towns growing into cities rapidly tend to be more diverse but again have very clear loyalties to the companies.”
In Ruwais, a quiet ecosystem thrives. Unlike Aramco’s Dhahran in the kingdom’s eastern province, which replicated an American suburban neighbourhood in form and function, Ruwais is quintessentially Arab.
Saeed guides us through old residential units, with curved roofs that have developed on sloping land similar to Amman’s hilly streets.
“They’ve been here since the ’80s,” he said. We turn a corner and see dune-coloured buildings under construction. They’re for bachelors living in Ruwais City, he says.
The city is expected to have up to 10,000 residential units from 7,500 at present to house a population that is expected to surge with the planned expansion of its industrial facilities.
Saeed lived in bachelor accommodation but moved out because the American-style open kitchen was not to his taste and he preferred somewhere closed to cook.
We pass by I Love Burgers, a popular Dubai fast food outlet that has opened in Ruwais. Adjacent to that is Mira’s Creamery, with advertising announcing “ice cream, love and more”.
Saeed is amused. “We have all this but our best kept secret is the butcher.” He shows us Ruwais’ slaughterhouse. “He’s the best in Abu Dhabi, wallah,” he laughs.
We go back to the hillock from where Saeed watches Ruwais’ fully lit industrial sites at night and he recounts the hospitality of the city’s Bedouin inhabitants.
“There is dhabiha for everything,” he says, using a local term for a feast involving slaughtered lamb or camel, usually in honour of a guest.
“If someone gets a promotion, there’s dhabiha, a TV, there’s dhabiha, if they’re happy, there’s dhabiha and they invite us all. Life is good, Alhamdulillah.”
They tried to optimise [refining and chemicals] by placing them next to each other and creating synergies of operations and other costs IMAN NASSERI Facts Global Energy