Abu Dhabi’s International Petroleum Investment Company (Ipic) is planning to push ahead with its long-delayed $3bn-plus refinery in Fujairah, after rising oil prices caused the company to reassess the project’s viability.
A source close to Ipic says a project management consultancy (PMC) deal for the project is now set to be awarded to the US’ Shaw Group by early April.
The Fujairah refinery would fulfil a strategic purpose, allowing tankers to load their cargo at the northern emirate and bypass the potential bottleneck of the Strait of Hormuz.
Once a PMC deal is awarded for the Fujairah refinery, Ipic may decide to move ahead with a further two refinery projects, in Morocco and Oman.
|IPIC’s planned refineries|
|Fujairah refinery||Fujairah, UAE||$3bn|
|Revamp of Zarqa refinery (joint venture with Jordan Petroleum Refining Company)||Zarqa, Jordan||$2bn|
|Jorf Lasfar refinery||Jorf Lasfar (south of Casablanca), Morocco||$5bn|
|Khalifa coastal refinery (74:36 joint venture of Ipic and Pak-Arab Refinery Limited, in which Ipic holds a 40 per cent stake)||Balochistan, Pakistan||$5bn|
|Duqm refinery and petrochemical complex (joint venture with Oman Oil Company)||Duqm, Oman||$7bn|
|*=Project budget is based on estimates. Source: MEED|
Ipic had been assessing the feasibility for greenfield refineries in Fujairah, Oman, Morocco and Pakistan, as well as an expansion programme in Jordan, before it decided to shelve the projects in light of falling oil prices during the global recession in late 2008 and early 2009.
Oil prices have rebounded over the past 18 months and are currently at about $106 a barrel, increasing the profitability of downstream projects. In 2009, crude prices dropped to as low as $40 a barrel.
In 2010, Ipic awarded or restarted feasibility studies for refineries in Fujairah and Morocco and the integrated refinery and petrochemicals complex in Oman. The Fujairah refinery feasibility study was awarded to UK consultancy Wood MacKenzie in July last year.
A source close to Shaw Group says the company is just in talks with Ipic about the Fujairah project, and the Oman scheme will be awarded separately.
The Khalifa Coastal Refinery project in Balochistan in southwest Pakistan was the most advanced of the schemes, but remains on the shelf due to the current political turmoil in the country. Ipic holds a 40 per cent stake in the estimated $5bn joint venture with the local Pak-Arab Refinery Limited (MEED 5:8:10). The Jordan project is also still on hold.