Adnoc Review

Ramping up USLD output

SAUDI Arabian and UAE refiners are set to compete against India and North Asia in ultra-low sulphur diesel (ULSD) exports as they ramp up production of ULSD via refinery upgrades or new greenfield projects.

“Location wise, the Middle East is nearer to Europe, and those spare barrels are less likely to be hurt by a backwardated market structure then barrels from North Asia, when arbitrage is possible,” says a source.

Ongoing refinery upgrades at Abu Dhabi Oil Refining Company’s (Takreer’s) 400,000 barels pwe day (bpd) Ruwais refinery has given it the ability to export ULSD or 10 ppm sulphur gasoil in the second half of last year. Since July, the Abu Dhabi National Oil Company (Adnoc) has sold four cargoes of 40,000 mt each of 10 ppm sulphur gasoil, which caters to Europe’s summer diesel requirements.

Late in 2009, Takreer signed contracts worth $9.6 billion with four South Korean engineering companies to expand capacity at the Ruwais refinery in an effort to develop its downstream industry to meet future energy requirements.

It is unclear if Adnoc plans to start selling ULSD on a term basis in 2013, or continue with monthly spot sales.

The lion’s share of ULSD production in the Middle East is expected to come from Saudi Arabia in the next four years. The country’s refining capacity will rise by 1.2 mbpd to 3.3 mbpd by 2016 with three greenfield refineries, the last of which – the 400,000 bpd Jazan Refinery and Terminal in southwestern Saudi Arabia.

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