Abu Dhabi's IPIC Increases Investment to $6.5 Billion for Two Middle East Refinery Projects

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Abu Dhabi's state-owned International Petroleum Investment Company (IPIC) has increased the possible investment in the 200,000-barrel-per-day (BBL/d) Al Fujairah refinery project to $3.5 billion, after saying that it would put $3 billion into the project in March this year.

It is also planning a 230,000-BBL/d refinery at Duqm in Oman, which will require a total $6 billion investment that would be split 50/50 between IPIC and Oman Oil Company (Muscat, Oman). The two refinery investments will total $6.5 billion for IPIC.

Both refinery projects are in the engineering and design phase. The Al Fujairah refinery is scheduled for completion in mid-2016. The Duqm refinery, designed to use United Arab Emirates and Omani crudes, will be completed in 2016-17 if the project goes ahead.

The refining additions will represent 20% of global growth in fuel processing capacity and will boost the Middle East's refining capacity by 60% according to industry analysts.

IPIC is also building a $4 billion pipeline to transport 1.5 million BBL/d of crude from Abu Dhabi's main onshore fields to Fujairah. The pipeline is scheduled to deliver its first oil in early 2012.

The Abu Dhabi Crude Oil Pipeline will allow ships to avoid passing through the security-threatened Strait of Hormuz, which is the chokepoint for entry into the Gulf. The port at Fujairah is also able to handle larger vessels than those that can be docked at Abu Dhabi's main-oil loading port of Ruwais in the Gulf.

Value-added products such as gasoline, diesel and jet fuel enable crude oil producers such as the United Arab Emirates and Oman to benefit from the higher value that these products fetch on the international markets. Domestic refinery projects meet local demand and allow processed fuel to be shipped to growing markets in Asia.

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