Fujairah facility to produce 1 million tonnes a year of fuels from 2016
- Dubai company close to completing financing
- EPC contract to be awarded in summer
- Facility to produce first green jet fuel outside North America
The local Petrixo Group will float the tender for its proposed $1.3bn biofuels refinery in Fujairah in the coming months, according to Eid al-Olayyan, the companys CEO.
The group plans to build a facility with the capacity to produce 1 million tonnes a day (t/y) of fuel by processing agricultural feedstocks imported to the port on the UAEs Gulf of Oman coast.
The refinery is planned to be commissioned by June 2016, with a possible three-month delay, Al-Olayyan tells MEED. The engineering, procurement and construction (EPC) will be tendered before the summer of 2015 and will be awarded in the summer of 2015.
The budget has increased significantly from $800m to a current expected investment of more than $1.3bn.
We are raising the funding for the project through equity, commercial banks and project finance by export credit agencies (ECAs), says Al-Olayyan. We are very close to the financial closure.
Petrixo Group will produce four types of fuels at the refinery, including jet fuel, diesel, naphtha and liquefied petroleum gas (LPG), as well as hydrogen gas, a by-product. The fuels will be marketed to the UAE and the wider GCC region.
In July 2014, UOP, a subsidiary of US-based Honeywell, was selected to provide the technology to produce the jet fuel and biodiesel.
According to Honeywell, the refinery will be the first commercial-scale renewable jet fuel production facility in the world outside of North America.
Honeywells green jet fuel can be blended up to 50 per cent with petroleum-based jet fuel and can be used in aircrafts with no changes to aircraft technology. The fuel can also reduce greenhouse gas emissions by 65-85 per cent, according to the company.
US engineering group Fluor has completed the projects front-end engineering and design (feed) study, according to sources familiar with the scheme.
The local market for green fuels and biofuels is growing, says Al-Olayyan. Green fuels are not competing with fossil fuels, they are completing the circle. Green fuel is used to enhance the environment, reduce carbon emissions and mitigate pollution, so the purpose is not to fill a gap of fuel shortage.
According to Al-Olayyan, the drop in the global oil market from a four-year period of $100-plus crude prices will not affect the success of the biofuels refinery.
The source of our raw materials is the agriculture sector, he says. The low crude prices are leading to a decrease in the agricultural raw materials cost, consequently decreasing the cost to produce our green products.
Petrixo Group is headquartered in Dubai, and is currently active in trading crude, oil products and petrochemicals, with an interest in downstream energy projects and logistics operations in the Baltic States, Russia, Central Asia and the Middle East.
The company is part of the diversified Saif Belhasa Holding, founded and chaired by Emirati entrepreneur Saif Belhasa.
The Fujairah biofuels refinery is expected to occupy 460,000 square metres in the Fujairah Freezone and the Port of Fujairah.
The UAE already has a growing biofuels sector, with two Dubai-based companies operating biodiesel refineries utilising used cooking oil from restaurants as feedstock.