The scale of the damage inflicted on Abu Dhabi’s main refinery at Ruwais by a fire in January was revealed in June with the award of a contract to repair the damaged facilities.
South Korea’s GS Engineering & Construction, the original builder of the units affected – which were added during a major expansion completed two years ago – was selected for the rehabilitation work.
In the interim, the emirate has been forced back to depend on the fuel imports that the multi-billion dollar capacity increase was designed to eliminate. Meanwhile, plans to carry out new upgrade projects at the refinery as part of state-owned Abu Dhabi National Oil Co.’s (ADNOC’s) wider efforts to maximise value from the emirate’s crude are moving slowly.
On June 30, GS announced receipt of a letter of award for an US$865 million, 18-month engineering, procurement and construction (EPC) contract by ADNOC subsidiary Abu Dhabi Oil Refining Co. (Takreer) to repair the units damaged in the fire. The precise cause of the incident has yet to be revealed. It broke out on January 11 at the new section of the refinery and affected mainly the 127,000 bpd residue fluid catalytic cracker (RFCC). Crude distillation and other damaged units were restored shortly after the incident.
Completion of the repairs is due in early 2019. GS won the US$3.1 billion EPC contract in 2010 to install the RFCC unit – as the centrepiece of the estimated US$10 billion expansion project, completed in 2015 after a delay of more than two years and roughly doubling capacity to around 820,000 bpd.
Other problems had been reported at the RFCC – among the world’s largest – including excessive catalyst consumption, raising the possibility that the scope of GS’s contract might go beyond the immediate repair needs. The overall expansion scheme was particularly aimed at expanding the output of gasoline and other light, high-value fuels from a 35-year-old plant, located in the Western Region around 240 km west of Abu Dhabi City.
Abu Dhabi will continue importing gasoline and propylene until the completion of the repairs, scheduled for early 2019.
Since commissioning of the expansion, and before January’s accident created an unwelcome distraction, two major new projects had been launched at the refinery cohering with ADNOC’s wider strategy of integrating upstream and downstream operations to squeeze the maximum return from every barrel of the emirate’s roughly 3.1 million bpd crude production.
Plans to add new gasoline and aromatics units are only at the design phase – with contracts awarded in December shortly before the fire for front-end engineering and design (FEED) and for technology supply – and are thus are assumed to be largely unaffected by the accident’s fallout.
However, a project to modify the newer section of the refinery to enable the processing of 420,000 bpd of offshore crude – in order to free up the more valuable onshore Murban stream for export – appears to be stalled at the EPC contractor selection stage.
A delay was created last year by bids received in late 2015 having come in well above the client’s budget, thought to be around US$3 billion. Revised prices were submitted in December by GS, compatriot Samsung Engineering and Spain’s Tecnicas Reunidas – with GS reported to have offered the cheapest bid – but an award remains pending.
The scheme calls for the addition of a 177,000 bpd atmospheric residue desulphurisation unit to handle the higher residue yield of crude from the supergiant Upper Zakum offshore field and for modifications to other of the new units – and thus seems likely to have been delayed by the repair work.
The costly need to return to imports may also have added new impetus to Abu Dhabi’s longstanding plans to develop a new refinery at Fujairah – shelved in its most recent form earlier in the year but confirmed by government-owned Mubadala Investment Co., the successor to the previous project’s sponsor, as remaining under consideration.
The US’ Bechtel – which was the FEED contractor on the Ruwais expansion – was reported in February to have been engaged by Takreer to study options for increasing the emirate’s refining capacity by around 400,000 bpd, either by expanding output again at the existing site or by pursuing the greenfield option in the eastern emirate.