Abu Dhabi fund International Petroleum Investment Company (Ipic) is reviewing its plans to invest in five foreign refinery projects that together could be worth more than $20bn.

Ipic, which was set up in 1984 to invest in the downstream oil and gas industry both within the emirate and abroad, has announced plans to develop grassroots refinery projects in Fujairah, Morocco, Oman and Pakistan both alone and with partners.

It also wants to invest in Jordan Petroleum Refining Company, which is planning a $2bn revamp of the kingdom’s only refinery at Zarqa in the north east of the country, sources close to the company tell MEED.

Although the fund and its partners had commissioned studies for the four new refineries in 2006-2008, the developments were put on hold in late 2008 and early 2009, as Ipic tried to gauge the impact of the global financial crisis on the profitability of refineries.

It subsequently decided to reassess the viability of the projects and has been tendering new studies since late 2009.

In July, UK consultancy Wood Mackenzie won the deal for a new study on the estimated $3bn-plus Fujairah refinery. This followed the late 2009 award of another contract to assess plans to build an integrated refinery and petrochemicals complex at Duqm in the east of Oman to the US’ KBC Advanced Technology.

Wood Mackenzie was commissioned to study the feasibility of Ipic’s planned $5bn Morocco refinery at Jorf Lasfar, to the South of Casablanca, in late 2007. It is reworking the original study in light of the impact of the crisis and should present its findings to Ipic by the end of 2010.

Ipic also wants to tender studies for the projects in Jordan and Pakistan, but is yet to reach agreements with its partners over how to move ahead with the schemes, both of which have been troubled since their inception.

The estimated $5bn Khalifa Coastal Refinery project in Balochistan in south west Pakistan is being developed by a 74:36 joint venture of Ipic and Pak-Arab Refinery Limited (Parco), in which Ipic already holds a 40 per cent stake.

The partners tendered a front end engineering and design (FEED) contract for the project in October 2008, but did not award the deal because of internal wrangling between the two companies related to the appointment of a new general manager at Parco.

“The project in Balochistan was the most advanced of Ipic’s plans, but has been on the shelf for some time due to the political situation in the country,” says a consultant at one international engineering firm who has been in talks with both of the partners over the project.

Meanwhile, the Zarqa project is inextricably linked with one of Jordan’s highest-profile political scandals of recent years.

In July, a military court sentenced four men to three years in prison on bribery charges related to the September 2009 award of the concession to revamp and expand the refinery to a Jersey-registered fund, Infra Mena. The company and the project remain highly sensitive subjects in the country, says one Amman-based consultant.

Each of Ipic’s planned projects fulfils a strategic purpose, creating access to established and emerging markets, says a senior executive at one Middle East bank.

Fujairah has access to the Indian Ocean, and bypasses the potential choke-point of the Straits of Hormuz, he explains. Jordan could benefit from increasing Iraqi oil production while providing access to the Levant and European markets through the Mediterranean. All of the refineries would use oil produced in Abu Dhabi as their primary feedstock, with the exception of the Zarqa plant, which is currently fed with Iraqi oil.

Morrocco has the same advantages as Jordan and abuts the Atlantic Ocean, along with North Africa. The Pakistan refinery’s output would easily be absorbed by huge demand for fuel products in the country, he adds.

The rationale behind the review is clear, says Phil Hunt, senior vice president of downstream consulting at UK firm Nexant. The market has changed drastically since the projects were first planned.

“We had a very good period of margins followed by a period of very bad margins,” he explains. The UK oil major BP made an average of $4 for every barrel of oil it refined in the US in 2009 and lost up to $1.47 a barrel in some territories during the latter part of the year, as opposed to the $9.90 a barrel it earned in 2007.

 “I think they are trying to work out what they are doing over the next 4-5 years,” says Paul Hodges, chairman of UK consultancy International eChem. “Once you have done that, you have the potential to assess how quickly you want to do the projects and in what sequence.”