Petroleum Investment in the Arabian Gulf

Petroleum Investment in the Arabian Gulf

OXFORD
INSTlTUTE
= =
FOR
ENERGY
STUDIES
Petroleum Investment in the Arabian Gulf
Goran Bergendahl
Oxford Institute for Energy Studies
F5
1985
The contents of this paper are for the
purposes of study and discussion and
do not represent the views of the
Oxford Institute for Energy Studies or
any of its members.
Copyright 0 1984
Oxford I n s t i t u t e f o r Energy S t u d i e s
ACKNOWLEDGEMENTS
Many persons have g i v e n v a l u a b l e comments t o the author
concerning t h e content of this report. S p e c i a l thanks go to John
Mugno, Citibank; Lakdasa W i j e t i l l e k e , Michael Pearson and Isaac
Sam, World Bank; Jens Mb1 lenbach, Leo Drol l a s , Marshal 1 Hal 1 and
J o h n Borkowski, B r i t i s h P e t r o l e u m .
1.
PETROLEUM INVESTMENTS I N THE MIDDLE EAST
1
2.
INVESTMENTS I N KUWAIT
4
3.
INVESTMENTS I N QATAR
10
4.
INVESTMENTS I N SAUDI ARABIA
16
5.
INVESTMENTS I N THE UNITED ARAB EMIRATES
26
6.
CONCLUSIONS
34
MOTES
45
REFERENCES
46
FIGURES
FIGURE
1
2
CAPITAL EXPENDITURES FOR THE MIDDLE
EAST PETROLEUM INDUSTRY
FLOW OF GAS PRODUCTS I N QATAR
3
12
TABLES
TABLE
1
CRUDE OIL PRODUCTION AND PETROLEUM
REFINING IN KUWAIT
37
2
INVESTMENTS IN KUWAIT
38
3
CRUDE OIL PRODUCTION AND PETROLEUM
REFINING I N QATAR
39
INVESTMENTS IN QATAR
40
4
5
CRUDE OIL PRODUCTION AMD PETROLEUM
REFINING I N SAUDI ARABIA
41
6
INVESTMENTS IN SAUDI ARABIA
42
7
CRUDE OIL PRODUCTION AND PETROLEDM
REFINING IN TRE UNITED ARAB EMIRATES
43
INVESTMENTS I N TIIE UNITED A R A B EMIRATES
44
8
I n 1974 t h e t h i r t e e n OPEC c o u n t r i e s suddenly r e c e i v e d
r e c o r d o i l r e v e n u e s of $114 b i l l i o n .
The d i s p o s a l of t h a t income
was as f o l l o w s : 35% was used t o f i n a n c e i m p o r t s of goods
consumer goods and the remainder
-
-
mainly
the c u r r e n t account s u r p l u s
-
was p l a c e d a b r o a d , m a i n l y i n t h e f o r m of b a n k d e p o s i t s ( s e e
s t a t i s t i c s i n Bergendahl 1984).
When a second, e v e n l a r g e r wave of o i l r e v e n u e s ( $ 2 7 9
b i l l i o n ) reached
t h e t h i r t e e n c o u n t r i e s i n 1980,
a larger
p r o p o r t i o n (some 64% o r $ 1 7 9 b i l l i o n ) was used d i r e c t l y f o r
i m p o r t s . But t h i s t i m e a s u b s t a n t i a l p a r t of the r e m a i n d e r w a s
p l a c e d i n t o l o n g e r - t e r m a s s e t s , s u c h a s s t o c k s , b o n d s and r e a l
estate.
Two years l a t e r o i l r e v e n u e s f e l l s l i g h t l y t o a l e v e l
of
$200 m i l l i o n and t h e c u r r e n t a c c o u n t s u r p l u s a l m o s t
disappeared.
What had happened?
Did t h e OPEC c o u n t r i e s choose
t o d i r e c t t h e i r s u r p l u s e s i n t o d o m e s t i c c o n s u m p t i o n o r into
domestic i n v e s t m e n t s ?
The a n s w e r
reasons.
i s not a s i m p l e o n e f o r a t l e a s t
two
F i r s t , t h e r e i s an enormous d i f f e r e n c e between t h e four
low-absorbing OPEC c o u n t r i e s and t h e o t h e r nine.
Kuwait, Qatar,
S a u d i A r a b i a and t h e UAE a c c o u n t e d f o r o i l r e v e n u e s o f $ 6 2
b i l l i o n i n 1974, $206 b i l l i o n i n 1980 and
$104 b i l l i o n i n 1982,
w i t h more and more s p e n t on domestic consumption and i n v e s t m e n t s
(39% i n 1 9 7 4 , 68% i n 1980, a n d 86% i n 1982).
Secondly, s i n c e the "low-absorbers"
by d e f i n i t i o n a r e
u n a b l e t o consume most of t h e i r o i l revenues, t h e y t h e r e f o r e had
s u b s t a n t i a l o p p o r t u n i t i e s for i n v e s t m e n t f r o m 1 9 7 4 t o 1982.
F i g u r e 1 shows how t h e four low-absorbers h a v e t a k e n advantage of
t h i s s i t u a t i o n by l e t t i n g p e t r o l e u m i n v e s t m e n t grow from $700
m i l l i o n in 1971 t o more than $14 b i l l i o n i n 1981.
This implies a
g r o w t h r a t e o f 35% p e r y e a r , a v e r y h i g h r a t e i n c o m p a r i s o n t o
o t h e r OPEC c o u n t r i e s and t h e r e s t of t h e t h i r d world.
The p r e s e n t s t u d y w i l l i n v e s t i g a t e the a c t i v i t i e s
behind t h e s e s t a t i s t i c s .
The purpose w i l l be t o f o l low up a c t u a l
i n v e s t m e n t s made by t h e four low-absorbing
t h e ten year p e r i o d 1973-82.
r e l a t e d investments.
Gulf c o u n t r i e s d u r i n g
The emphasis w i l l b e on petroleum-
However, o t h e r l a r g e - s c a l e i n v e s t m e n t s w i l l
a l s o be included.
The o u t l i n e i s a s f o l l o w s .
The a n a l y s e s of a c t u a l
investment a l t e r n a t i v e s a r e i n S e c t i o n s 2-5, w i t h one s e c t i o n
e a c h for K u w a i t ,
Q a t a r , S a u d i A r a b i a and t h e U n i t e d Arab
Emirates.
c o n c l u s i o n s and a r e a s for f u r t h e r study w i l l
Finally,
be p r e s e n t e d i n S e c t i o n 6 .
2
Figure 1
Capital Expenditures for the Middle East Petroleum I n d u s t r y
LNG-PLANTS
I
O I L b GRS
EXTRRCTION
;I
1'1
REFINERIES
PIPE LINES
CHEHl CRL
PLRNTS
3
The s m a l l kingdom o f K u w a i t , w i t h about 1.45 m i l 1 i o n
i n h a b i t a n t s i n a n a r e a of 17,000 km2 , has one of t h e h i g h e s t p e r
c a p i t a incomes i n t h e world. Though t h e country i s q u i t e young
i t became i n d e p e n d e n t i n 1 9 6 1
-
-
i t s o i l h i s t o r y s t r e t c h e s back
o v e r s e v e r a l decades.
I n 1933, t h e Anglo-Persian
O i l Company ( t o d a y B r i t i s h
Petroleum) and t h e Gulf O i l Company a p p l i e d f o r a concession. One
year l a t e r they formed t h e Kuwait O i l Company (KOC) which s t a r t e d
t o e x p l o r e t h e c o n c e s s i o n a r e a i n 1936.
d i s c o v e r e d i n Burgan i n Southern Kuwait.
I n 1938 o i l was
A f t e r t h e Second World
War Burgan was d e v e l o p e d , and e x p o r t s s t a r t e d i n 1946. O i l was
d i s c o v e r e d a t Margwa i n 1951 and a t al-Ahmadi i n 1952.
A f t e r 1955 KOC s t a r t e d t o d r i l l i n Northern Kuwait. O i l
was d i s c o v e r e d a t Raudhatain i n t h e same year, a t Bahra i n 1956,
a t S a b r i y a h i n 1957, a t M i n a g i s h i n 1959 and a t Umm G u d a i r i n
1962.
In 1974, t h e Government took o v e r 60% of t h e assets of
KOC i n c l u d i n g a r e f i n e r y and a n LPG p l a n t a t al-Ahrnadi.
The
f ol lowing year t h e Government a c q u i r e d t h e remaining 40% e q u i t y .
BP a n d G u l f O i l were g u a r a n t e e d l i f t i n g s of 5 0 0 , 0 0 0 b / d and
450,000 b / d r e s p e c t i v e l y a t a d i s c o u n t of 1 5 c e n t s / b a r r e l a n d
w i t h 60 days’ c r e d i t .
4
I n 1947, t h e A m e r i c a n I n d e p e n d e n t O i l CO ( A m i n o i l )
a p p l i e d for a concession i n t h e N e u t r a l Zone.
Drilling started
in 1949 and o i l w a s d i s c o v e r e d a t Wafra in 1953 and a t U r n Gudair
i n 1966.
The company w a s t a k e n o v e r by t h e G o v e r n m e n t i n 1977
and was t r a n s f e r r e d t o KOC i n 1978.
The o f f s h o r e r i g h t s of t h e Meutral Zone were o b t a i n e d
i n 1957-8 by t h e A r a b i a n O i l Company (AOC), end t h e K u w a i t i
Government o b t a i n e d 10% of t h e e q u i t y of AOC.
O i l w a s discovered
a t R h a f j i in 1960, a t Hout in 1962, a t L u l u i n 1 9 6 6 and a t D o r r a
i n 1967, I n 1974 t h e Kuwaiti Government took o v e r a n a d d i t i o n a l
202 of t h e e q u i t y of AOC.
The Kuwait N a t i o n a l
Petroleum
Company
(KNPC) was
e s t a b l i s h e d i n 1960 t o be owned j o i n t l y by t h e Government and by
private Kuwaiti interests.
It took over
t h e domestic
d i s t r i b u t i o n of p e t r o l e u m p r o d u c t s f r o m KOC, a n d i n 1975 t h e
Government g a i n e d c o m p l e t e c o n t r o l of RNPC, The company now
o p e r a t e s t h r e e r e f i n e r i e s , Mina A b d u l l a ( t a k e n o v e r from Aminoil
i n 19781, Mina al-Ahmadi ( f o r m e r l y o p e r a t e d by KOC) and Shuaiba.
In a d d i t i o n , t h e K u w a i t S h e l l P e t r o l e u m D e v e l o p m e n t
Company and t h e Kuwait Spanish Petroleum Company
d r i l l e d in Kuwait.
unsuccessful l y
Both companies are now d i s s o l v e d .
The main i n v e s t m e n t s i n K u w a i t i c r u d e o i l p r o d u c t i o n
were made b e f o r e 1970.
about 3,300,000 b/d,
C r u d e o i l p r o d u c t i o n p e a k e d i n 1972 a t
a f t e r which c a p a c i t y u t i l i z a t i o n
s u b s t a n t i a l l y t o a l e v e l of about 800,000 b/d i n 1982.
declined
Table 1
g i v e s d e t a i l s of t h i s development, and it can b e s e e n from t h e s e
s t a t i s t i c s t h a t t h e d e c l i n e i n demand f o r crude o i l i s one f a c t o r
5
r e s p o n s i b l e € o r t h e d r o p i n p r o d u c t i o n . The e x p o r t of r e f i n e d
p r o d u c t s has been more s t a b l e , a l t h o u g h t h e r e has been a s l i g h t
d e c l i n e from a peak i n 1979.
Refinery c a p a c i t i e s were expanded a t Shuaiba i n 1973-76
and a new Isomax u n i t was introduced i n 1978 ( s e e C e n t r a l Bank of
K u w a i t , 1980, p42).
I n 1979 t h e r e w a s a r e d u c t i o n i n o u t p u t
c a p a c i t y a t Mina al-Ahmadi
l e a d i n g t o an a l m o s t maximal u s e of
r e f i n e r y c a p a c i t i e s t h a t year.
Since t h e n Kuwaiti usage of i t s
r e f i n e r y c a p a c i t y h a s d e c l i n e d t o a l e v e l of 0.57 i n 1981.
In s p i t e of t h i s low u s e ,
Kuwait h a s d e c i d e d t o
m o d e r n i s e and e x p a n d t h e p l a n t s in Mina a l - A h m a d i and i n Mina
Abdul l a h .
KPC's
c a p i t a l was i n c r e a s e d by KD 1.5 b i l l i o n (=$5.4
b i l l i o n ) , t o c o v e r t h e o u t l a y (see MEED, May 1983, p9). For Mina
al-Ahmadi,
Japan Gasol i n e obtained a c o n t r a c t w o r t h between $500-
700 m i l l i o n f o r t h e i n s t a l l a t i o n of 11 new u n i t s by 1984.
Later
t h e same company o b t a i n e d an a d d i t i o n a l c o n t r a c t w o r t h
a p p r o x i m a t e l y K D 325 m i l l i o n t o i n s t a l l
an a d d i t i o n a l
d e s u l p h u r i s a t i o n u n i t , a h y d r o c r a c k i n g u n i t , a n o t h e r vacuum
d i s t i l l a t i o n u n i t and
8
f l u i d c a t a l y t i c cracking unit.
The f i n a l
s t r u c t u r e i s planned t o be completed i n 1986/87.
Furthermore,
t h e r e f i n e r y c a p a c i t y of Mina Abdul l a h
w i l l be expanded up t o a l e v e l of 250,000 b/d a t a c o s t of KD 230
m i l 1ion.
KPC's
s u b s i d i a r y , Kuwait Santa Fe Braun Engineering and
P e t r o l e u m P r o j e c t s Company g o t t h i s c o n t r a c t , i n c l u d i n g t h e
u p g r a d i n g of e x i s t i n g u n i t s a n d t h e i n s t a l l a t i o n o f new
p r o c e s s i n g u n i t s ( f o r d e t a i l s , s e e Arab O i l & Gas D i r e c t o r y , 1983
~162). The aim i s t o e x p a n d r e f i n e r y o u t p u t by 93,000 b / d of
naphtha, 50,000 b/d of g a s o l i n e , 118,000 b/d of ATK,
6
117,000 b/d
of d i e s e l a n d 82,000 b / d of low s u l p h u r o i l .
A t t h e same t i m e
f u e l o i l p r o d u c t i o n w i l l b e r e d u c e d by a l m o s t 100,000 b / d .
A l t o g e t h e r , t h i s means t h a t o u t p u t w i l l b e d o u b l e d from a b o u t
352,000 b / d t o d a y to 7 2 5 , 0 0 0 b / d w h e n t h e i n v e s t m e n t i s
completed, 1
I n t h e petrochemical s e c t o r , Petrochemical I n d u s t r i e s
Corporation (PIC) i s a wholly-owned
PIC,
s u b s i d i a r y of KPC.
I n 1964,
Gulf O i l and BP s e t u p t h e K u w a i t C h e m i c a l F e r t i l i z e r
Company (KCPC) t o o p e r a t e a p e t r o c h e m i c a l p l a n t a t Shuaiba ( P l a n t
A),
producing urea,
sulphuric acid,
ammonia and ammonium
I n 1 9 7 3 , PIC t o o k o v e r t h e s h a r e s o f BP a n d G u l f O i l
sulphate.
i n t h e company.
Then i n 1977 t h e p l a n t c a p a c i t y was e x p a n d e d
from 550 tonneslday t o 950 tonnes/day.
PIC a l s o o p e r a t e s P l a n t B a t Shuaiba, which i n c l u d e s 2
u r e a u n i t s (670 tonnes/day) and 2 ammonia u n i t s (800 tonneslday).
T h e s e u n i t s s t a r t e d t o o p e r a t e i n 1971-72, a n d i n 1 9 7 9 and 1981
two new ammonia u n i t s (1,000 tonneslday each) were c o n t r a c t e d .
In 1980 a M e l a m i n e p l a n t a t S h u a i b a w e n t i n t o
p r o d u c t i o n w i t h a c a p a c i t y of 15,000 t o n n e s / y e a r and at a c o s t of
KD 1 0 m i l l i o n .
The p r o j e c t i s owned by t h e K u w a i t M e l a m i n e
Industries Company (KMIC).
A p l a n t t o produce 420,000 t o n n e s l y e a r of a r o m a t i c s and
350,000 t o n n e s l y e a r of o l e f i n s was s c h e d u l e d for Shuaiba i n 1984.
However,
abandoned.
t h e $1,3b c o n t r a c t t o t h e K P C subsidiary h a s b e e n
I n s t e a d PIC e x p a n d e d i t s c a p a c i t y by b u y i n g 25% of
t h e West German Company Hoechst (see Otaqui 1983, p. 19).
PIC is
a l s o p a r t i c i p a t i n g i n a n ammonia complex a t S i t r a , Bahrain.
7
Finally,
P I C has s i g n e d a c o n t r a c t w o r t h KD 3.6
m i l l i o n w i t h Tokuyame Soda Company of Japan for t h e c o n s t r u c t i o n
of a 7 5 tonneslday c h l o r i n e p l a n t a t Shuaiba.
A second u n i t w i l l
be a 150 tonneslday s a l t f a c i l i t y a t a c o s t of KD1.3m.
T u r n i n g t o the n a t u r a l gas s e c t o r , t h e r e a r e t h r e e
a r e a s from w h i c h i t is o b t a i n e d , namely t h e n o r t h
and S a b r i y a ) ,
(Raudhatain
t h e west ( M i n a g i s h , Umm G u d a i r and S o u t h Umm
Gudair) and t h e s o u t h (Burgan and Magwa-Ahmadi).
Most of t h e g a s
i s sent by p i p e l i n e t o b e processed a t Shuaiba.
Kuwait h a s two LPG p l a n t s , one i n Mina al-Ahmadi a n d
a n o t h e r i n S h u a i b a , of w h i c h t h e t o t a l c a p a c i t y i s 5.5 m i l 1 i o n
t o n n e s l y e a r (about 110,000 b/d i n terms of o u t p u t ) .
However,
the
o p e r a t i o n i s f a r below c a p a c i t y , mainly because a s u b s t a n t i a l
amount o f t h e gas i s “ a s s o c i a t e d ’ ’ ( w i t h t h e p r o d u c t i o n of c r u d e
oil).
Over t h e l a s t 1 5 y e a r s , Kuwait O i l T a n k e r s Company
(KOTC),
a KPC s u b s i d i a r y , h a s g r e a t l y expanded its t a n k e r f l e e t .
I n 1981 i t owned 1 7 o i l t a n k e r s w i t h a c a p a c i t y of 2,408,000 dwt
and four
LPG c a r r i e r s of 71,650~11~
each. Furthermore, o r d e r s have
b e e n p l a c e d for two l a r g e c r u d e c a r r i e r s (each o f 290,000 d w t )
and t h r e e p r o d u c t c a r r i e r s ( e a c h o f 65,000 dwt
1983). T h e K u w a i t i Government h a s f o r c e d
-
s e e MEED, May
i t s customers t o use
K u w a i t i t a n k e r s f o r a t l e a s t 50% of t h e i r p u r c h a s e s . M o s t LPG
s a l e s go t o Japan.
Kuwait has a l s o i n v e s t e d i n p i p e l i n e s f o r c r u d e o i l ,
n a t u r a l g a s and r e f i n e d p r o d u c t s .
They a r e o p e r a t e d b y K O C
e x c e p t f o r two s u b m a r i n e l i n e s f r o m Mina A b d u l l a h o p e r a t e d by
KNPC.
8
Funds h a v e a l s o b e e n a l l o c a t e d for i n d u s t r i a l
development.
For example,
received
certain
a
t h e Shuaiba Area A u t h o r i t y (SAA) h a s
amount
for
the
expansion
of
its
i n f r a s t r u c t u r e , and a J a p a n e s e c o n s o r t i u m h a s o b t a i n e d KD 113
m i l l i o n f o r t h e c o n s t r u c t i o n of e i g h t new 300MW t u r b i n e s a t Ras
al-Zour t o b e completed about 1987.
I n t o t a l , t h e l a r g e s t investment p r o j e c t s i n Kuwait
h a v e b e e n t h e r e f i n e r y e x p a n s i o n i n Mina Al-Ahrnadi
Abdullah.
and Mina
An o v e r v i e w of p l a n t s , d a t e s , c o s t s and o r g a n i s a t i o n s
is p r e s e n t e d i n T a b l e 2.
9
3. IXVESRIEHTS IB QATAR
Q a t a r i s s m a l l e r t h a n Kuwait, w i t h 230,000 i n h a b i t a n t s
in a n a r e a of 1 0 , 2 0 0 km’,
and the h i g h e s t GNP p e r c a p i t a i n t h e
world (about $27,000 i n 1981).
Qatar became independent i n 1971.
I t s o i l h i s t o r y s t a r t e d i n 1931, when t h e Anglo-Persian
O i l Company (now BP) c a r r i e d o u t a d e t a i l e d g e o l o g i c a l
i n v e s t i g a t i o n of t h e area.
The a c t u a l e x p l o r a t i o n was made by
P e t r o l e u m D e v e 1opment Company ( w h i c h I a t e r became t h e Q a t a r
P e t r o l e u r n Company)
in a s s o c i a t i o n w i t h t h e Iraq P e t r o l e u m
Company, p a r t l y owned by Anglo P e r s i a n O i l Company, O i l was found
i n Dukhan i n 1938 and p r o d u c t i o n reached a l e v e l of 40,000 b/d.
The w e l l s were s e a l e d d u r i n g t h e Second W o r l d War,
a f t e r w h i c h p r o d u c t i o n r e - s t a r t e d i n 1947.
A new t e r m i n a l was
completed i n Umm Said from which shipments commenced in 1949.
I n 1960, t h e S h e l l Company of Q a t a r found o i l o f f s h o r e
a t Idd a l - S h a r g i and a t Maydan Mahzam.
Ten years l a t e r a t h i r d
o f f s h o r e f i e l d was d i s c o v e r e d a t Bul Hanine.
In 1973, t h e Government of Qatar took o v e r 25% of Qatar
Petroleum Company and She1 1 Company of Qatar.
The Qatar General
Petroleum C o r p o r a t i o n (QGPC) was e s t a b l i s h e d i n 1974 and a c q u i r e d
a l l s h a r e s i n t h e s e two companies,
The German f i r m W i n t e r s h a l l
10
signed
a production
agreement (1973) f o r t h e North oilfields,
which was t r a n s f e r r e d
t h r e e years l a t e r i n t o a production-sharing
agreement.
This
agreement i s now terminated, and two o t h e r companies, t h e Holker
Company of t h e U.S.
and t h e Q a t a r O i l Company of Japan, h a v e a l s o
re1 inquished t h e i r o f f s h o r e concessions,
O i l was f o u n d a t Al-Bunduq
Dhabi, in 1972.
on t h e b o r d e r w i t h Abu
P r o d u c t i o n i s shared e q u a l l y w i t h Abu Dhabi and
managed by Abu Dhabi Marine Areas (ADMA).
Qatar's
concession i s
h e l d by t h e Bunduq Company ( s e e E l M a l l a k h 1979, p34).
QGPC
The main e x p l o r a t i o n for o i l f i e l d s h a s now ended.
had f i v e r i g s i n o p e r a t i o n i n 1981,
t h r e e o n s h o r e and two
The main p r o d u c t i o n of o i l t a k e s p l a c e on t h e Dukhan
offshore.
f i e l d ( o n s h o r e ) a n d on t h e t h r e e o f f s h o r e f i e l d s of I d d a l S h a r g i , M a y d a n Mahzam a n d B u l H a n i n e .
( F o r t h e s i z e of
see T a b l e 3).
production,
O i l i s p r o d u c e d mainly f o r e x p o r t , with o f f s h o r e o i l
being shipped from t h e H a l u l I s l a n d t e r m i n a l . A s u b s t a n t i a l p a r t
of t h e s e e x p o r t s g o e s t o J a p a n ,
France,
I t a l y and t h e
Netherlands.
Qatar Owns two r e f i n e r i e s ,
s i t u a t e d a t Umm Said.
The
f i r s t w i t h a c a p a c i t y of 12,000 b/d i s small, b u t t h e second one,
completed i n 1983, can produce 50,000 b/d.
These r e f i n e r i e s a r e
o p e r a t e d by t h e N a t i o n a l O i l D i s t r i b u t i o n Company (NODCO).
While t h e o i l r e s o u r c e s of Q a t a r are l i m i t e d and may
b e d e p l e t e d i n t w e n t y years'
n a t u r a l gas.
time,
t h e r e i s a n abundance of
C o n s e q u e n t l y , n a t u r a l g a s i s used a s f u e l and
f e e d s t o c k f o r i n d u s t r i a l a c t i v i t i e s i n Qatar.
O n s h o r e n a t u r a l g a s i s o b t a i n e d a t t h e Dukham f i e l d
11
Figure 2
Flow of Gas Products in Qatar
DISTRIBUTION
I
I
PLANT 1
UMM S A I D
I
1
I
I
\
DOMESTIC
CONSUMPTION
12
1
LNG
I
RASLAFFAN'
I
PE.TF0CHEMICAL
PLANT
h
LIZER
b o t h as a s s o c i a t e d a n d n o n - a s s o c i a t e d
g a s (see F i g u r e 2).
Associated g a s i s o b t a i n e d as a s o l u t i o n g a s which i s s e p a r a t e d ,
c o l l e c t e d and c o m p r e s s e d and t h e n t r a n s m i t t e d t o a s t r i p p i n g
p l a n t a t Fahahil.
gas
-
One o u t p u t f r o m t h i s p l a n t i s a m e t h a n e r i c h
s o l d through t h e domestic d i s t r i b u t i o n system
main o u t p u t i s n a t u r a l g a s l i q u i d (NGL),
-
but the
which is t r a n s f e r r e d by
p i p e l i n e t o o n e of t h e NGL p l a n t s a t Umm S a i d .
The o u t p u t f r o m
t h i s p l a n t i s propane and b u t a n e f o r domestic u s e , g a s o l i n e f o r
e x p o r t and a n e t h a n e r i c h gas s u p p l i e d t o a petrochemical p l a n t .
Associated g a s can a l s o be produced d i r e c t l y from two
s o - c a l l e d gas caps a t t h e Dukhan f i e l d , a l t h o u g h t h i s a l t e r n a t i v e
is v e r y r a r e l y used.
The non-associated gas a t t h e Dukhan f i e l d is o b t a i n e d
a t Khuff.
E i g h t p l a n t s a r e a v a i l a b l e , of w h i c h f o u r h a v e a
c a p a c i t y of 2.8 m i l l i o n m 3 / d a y , and f o u r h a v e a c a p a c i t y o f 1.4
m i l l i o n m 3 /day.
A t p r e s e n t , no more t h a n 40% of t h i s c a p a c i t y is
used.
The o f f s h o r e
associated gas
i s s e p a r a t e d and
compressed a t t h r e e p l a t f o r m s and t r a n s m i t t e d t o t h e second NGL
p l a n t a t Umm Said t o g e t h e r w i t h t h e s e p a r a t e d gas l i q u i d .
NGL is
obtained f o r export, ethane r i c h gas f o r t h e petrochemical p l a n t
and methane r i c h g a s f o r f e r t i l i s e r production.
Off s h o r e non-associated
gas i s n o t c u r r e n t l y produced,
b u t s u b s t a n t i a l reserves a r e a v a i l a b l e i n t h e North F i e l d ( s e e
Petrie-Ritchie,
1982 and 1983).
The t o t a l p r o d u c t i o n of n a t u r a l g a s in Q a t a r i n 1981
was a b o u t 12.2 m i l l i o n m3/day
capacity.
with a s u b s t a n t i a l l y higher
I n o r d e r t o make b e t t e r u s e of t h e e x i s t i n g r e s e r v e s
13
and
c a p a c i t i e s t h e Q a t a r i Government has d e c i d e d t o i n v e s t
$5 b i l l i o n i n a new LNG p l a n t a t Ras L a f f a n .
This project, a
j o i n t v e n t u r e w i t h BP and CFP (Compagnie F r a n c a i s e d e s P e t r o l e s ) ,
w i l l make it p o s s i b l e t o p r o c e s s about 25 m i l l i o n m3/day of LNG.
The f i r s t NGL f a c i l i t y a t Umm Said can produce 650,000
t o n n e s of LPG f r o m 310,000 b / d of o n s h o r e c r u d e .
The s e c o n d
f a c i l i t y c a n p r o d u c e 460,000 t o n s of LPG f r o m 3 7 5 , 0 0 0 b / d of
o f f s h o r e crude,
In
J u l y 1 9 8 1 27% of t h i s c a p a c i t y was u s e d .
A l l LPG is exported,
Turning t o p e t r o c h e m i c a l production,
t h e Qatar
P e t r o c h e m i c a l s Company (QAPCO) i s a j o i n t v e n t u r e b e t w e e n t h e
F r e n c h Company Cdf Chimie and QGPC,
I t o p e r a t e s one e t h y l e n e
p l a n t ( 7 7 0 t o n n e s l d a y ) and o n e p o l y e t h y l e n e (LDP) p l a n t (380
tonnes/day), b o t h in Umm Said.
A t h i r d high-density p o l y e t h y l e n e
p l a n t ( 1 9 0 t o n n e s l d a y ) i s a l s o s c h e d u l e d f o r Umm S a i d . Cdf and
QGPC h a v e a l s o i n v e s t e d i n a p e t r o c h e m i c a l complex i n Dunkirk,
France.
The Q a t a r F e r t i l i z e r Company (QAFCO) o p e r a t e s two
plants,
e a c h p r o d u c i n g 900 t o n n e s l d a y of ammonia and 1,000
tonnes/day of urea.
A t h i r d p l a n t i s scheduled.
Most o i l is exported by f o r e i g n v e s s e l s (QGPC owns one
t a n k e r ) f r o m H a l u l I s l a n d , Umm S a i d a n d R a s Abu Abbut ( r e f i n e d
products).
There are s e v e r a l l a r g e i n v e s t m e n t p r o j e c t s o u t s i d e t h e
petroleum sector.
At Umm Said, a n i r o n and s t e e l p l a n t (700,000
t o n n e s / y e a r ) has been b u i l t for t h e Qatar S t e e l Company (QASCO)
a t a c o s t of about QR 1.6 b i l l i o n ( s e e E l M a l l a k h 1979, p87).
w i l l use about 10 m i l l i o n m3 /day of n a t u r a l g a s a s f e e d s t o c k .
14
It
A power and d e s a l i n a t i o n p l a n t a t R a s Abu Fontae n e a r
Doha was i n i t i a t e d in 1977.
The t o t a l c o s t i s e s t i m a t e d a t a b o u t
QR 2.0 b i l l i o n , producing 612 MW power and 16,000 m i l l i o n m3 /day
of d e s a l i n a t e d water.
I n 1 9 6 7 t h e Q a t a r N a t i o n a l Cement Company s t a r t e d a
cement f a c t o r y i n o r d e r t o u t i l i z e t h e l i m e s t o n e and c l a y
a v a i l a b l e a t Umm Bab.
P r o d u c t i o n is assumed t o b e 600,000
t o n n e s / y e a r a t a c o s t of a b o u t QR 0.8 b i l l i o n .
T a b l e 4 g i v e s an o v e r v i e w of p l a n t s , d a t e s , c o s t s and
o r g a n i s a t i o n s f o r t h e main i n v e s t m e n t s in Qatar.
15
4 . IBIIESTHEHTS IR SAHDI ARABIA
Saudi Arabia has t h e l a r g e s t o i l r e s e r v e s i n the world
(about 23 b i l l i o n tonnes), w i t h b o t h t h e l a r g e s t onshore (Ghawar)
and t h e l a r g e s t o f f s h o r e ( S a f a n i a ) o i l f i e l d s .
About 9.68 m i l l i o n
i n h a b i t a n t s l i v e i n a n a r e a of 2,150,000 km.
After a s u r v e y by t h e B r i t i s h Major Holmes i n 1923-25,
o i l was d i s c o v e r e d
i n B a h r a i n i n 1932.
As a consequence,
Standard O i l of C a l i f o r n i a (now Chevron) formed a s u b s i d i a r y , t h e
C a l i f o r n i a Arabian Standard O i l Company (CASOC), which s t a r t e d t o
e x p l o r e t h e Arabian peninsula.
took o v e r 50% o f CASOC.
I n 1937, t h e T e x a s O i l Company
One y e a r l a t e r o i l w a s f o u n d at Dammam
and t h e f i r s t e x p o r t s went from Ras Tanura i n May 1939.
Then i n
1940 two o i l f i e l d s , Abu Hadriya and Abqaiq, were d i s c o v e r e d .
I n 1944, CASOC was c h a n g e d i n t o Aramco, a n d i n 1 9 4 7 ,
S t a n d a r d O i l of New J e r s e y (now Exxon) and Socony Vacuum (now
Mobil) j o i n e d Aramco,
One y e a r l a t e r t h e l a r g e s t o i l f i e l d in t h e
w o r l d was found a t Ghawar.
In 1949, G e t t y Oil Company o b t a i n e d a n o i l c o n c e s s i o n
for h a l f t h e N e u t r a l Zone ( t h e o t h e r h a l f had a l r e a d y been
t o Aminoil by t h e Kuwaiti Government).
given
Wafra o i l f i e l d was found
i n 1953, S o u t h Fuwaris i n 1963 and S o u t h Umm G u d a i r i n 1966. A S
m e n t i o n e d in S e c t i o n 2 a b o v e , t h e A r a b i a n O i l Company (AOC) had
16
b e e n g r a n t e d t h e o f f s h o r e r i g h t s of t h e N e u t r a l Zone i n 1 9 5 7 ,
where o i l was found in K h a f j i in 1960 and i n Hout i n 1963.
The Saudi Government took o v e r 25% of Aramco i n 1973 8n
a d d i t i o n a l 352 i n 1974.
The p r o c e s s of t o t a l t a k e o v e r s t a r t e d i n
1976 and f i n i s h e d i n 1981.
Among t h e t h r e e companies managing c r u d e o i l p r o d u c t i o n
in S a u d i A r a b i a a t p r e s e n t ,
expanding
Aramco h a s b e e n most a c t i v e i n
production capacity.
1948, p r o d u c t i o n
A f t e r o i l was found i n Ghawar i n
s t a r t e d in Saf a n i y a h (19571, i n K h u r s a n i y a h
(19601, i n F a d i l i and K h u r a i s (19631, i n M a n i f a (19641, i n Abu
Sa’fah
(19661, i n B e r r i ( 1 9 6 7 ) a n d i n Z u l u f ,
Harmaliyah (1973).
Daw1 (offshore),
M a r j a n and
F u r t h e r d i s c o v e r i e s h a v e been made at ‘Amad,
Duhaynah,
Hurayri,
Jubah,
N i t a and S a l s a 1
( o f f s h o r e ) as w e l l a s a t e x i s t i n g s i t e s a t A b q a i q , Duhaynah,
Jubah,
J u r a y d and Z u l u f .
By t h e end o f 1 9 8 1 Aramco had 1 6
onshore and 11 o f f s h o r e d r i l l i n g r i g s i n o p e r a t i o n .
In a d d i t i o n ,
t h e r e a r e p l a n s for i n v e s t m e n t i n f o u r new “ c a n t i l i v e r ” o f f s h o r e
d r i l l i n g platforms.
The t o t a l p r o d u c t i o n c a p a c i t y of
e s t i m a t e d a t 11-12 m i l l i o n b/d.
Saudi Arabia
is
A t Khurais Aramco has i n v e s t e d
i n w a t e r i n j e c t i o n s y s t e m s i n o r d e r t o m a i n t a i n this c a p a c i t y
level,
Furthermore, i n 1982 p r o d u c t i o n c a p a c i t y was
investment i n g a s - o i l
expanded by
s e p a r a t o r p l a n t s (GOSPs) a t t h e Marjan and
Z u l u f f i e l d s (more t h a n $500 m i l l i o n was a l l o c a t e d f o r t h i s
purpose).
The p r o d u c t i o n of crude o i l i n Saudi A r a b i a ( s e e T a b l e
5) p e a k e d a t 9.9 m i l l i o n b / d i n 1980, of w h i c h 97% came f r o m
Aramco.
The overwhelming p a r t of t h i s p r o d u c t i o n was exported.
17
In t h e middle of 1982 p r o d u c t i o n f e l l below 6 m i l l i o n b/d.
The r e d u c t i o n i n s a l e s of crude o i l may l e n d support t o
Saudi Arabia's
d e c i s i o n t o go downstream and i n v e s t i n r e f i n e r y
c a p a c i t y , This c a p a c i t y h a s expanded from 700,000 b/d i n 1977 t o
1,200,000 b/d i n 1983, and t h i s p r o c e s s seems s e t t o c o n t i n u e in
the future.
Ras Tanura is t h e o l d e s t and l a r g e s t r e f i n e r y i n S a u d i
Arabia,
It has been o p e r a t e d by Aramco since 1945, when i t had a
a c a p a c i t y of 50,000 b/d.
I t was expanded t o a l e v e l of 550,000
b / d i n 1976 a n d 713,000 b / d i n 1982.
I t s m a i n p r o d u c t s a r e LPG,
f u e l o i l , d i e s e l o i l and naphtha.
Petromin (Petroleum and M i n e r a l O r g a n i s a t i o n ) was s e t
up t o m a r k e t and d i s t r i b u t e oil p r o d u c t s .
o p e r a t e s two r e f i n e r i e s ,
However, i t a l s o
one i n Jeddah and t h e o t h e r i n Riyadh.
The r e f i n e r y i n J e d d a h o r i g i n a l l y ( i n 1968) h a d a
c a p a c i t y of 12,000 b / d , b u t was e x p a n d e d t o 70,000 b / d (in 1978)
a n d t o 110,000 b / d ( i n 1982).
There a r e p l a n s t o expand i t
f u r t h e r up to a l e v e l of 265,000 b / d ( s e e Kingdom of S a u d i
A r a b i a , 1 9 8 2 , p63).
The J e d d a h r e f i n e r y p r o d u c e s g a s o l i n e ,
d i e s e l o i l , f u e l o i l and naphtha.
I n Riyadh,
t h e r e f inerg produces mainly g a s o l ine,
d i e s e l o i l and a s p h a l t .
It s t a r t e d i n 1974 a t a l e v e l of 15,000
b / d a n d when a new u n i t was c o m p l e t e d i n 1981, c a p a c i t y w e n t up
t o 120,000 b / d .
Two r e f i n e r i e s o p e r a t e i n t h e N e u t r a l Zone, i n b o t h
c a s e s w i t h f u e l o i l a s t h e main product,
I n Mina Saud, G e t t y O i l
h a s p r o d u c e d 50,000 b / d s i n c e 1958. I n K h a f j i , t h e A r a b i a n O i l
18
Company has had a p r o d u c t i o n l e v e l of 30,000 b/d s i n c e 1966.
P e t r o m i n o p e r a t e s two s m a l l l u b e o i l r e f i n e r i e s i n
Jeddah i n a j o i n t v e n t u r e w i t h Mobil O i l .
Two more were under
c o n s t r u c t i o n at J u b a i l ( 1 2 , 0 0 0 b / d ) t o g e t h e r w i t h T e x a c o and
C h e v r o n , and a t Yanbu (5,000 b / d ) i n p a r t n e r s h i p w i t h A s h l a n d ,
b u t b o t h h a v e now been scrapped.
A t Yanbu, a s i x t h r e f i n e r y came into o p e r a t i o n a t t h e
T h i s i n v e s t m e n t , w i t h a c a p a c i t y of 170,000
b e g i n n i n g o f 1983.
b/d and
a t a c o s t of $1.4 b i l l i o n , i s s c h e d u l e d t o m e e t domestic
demand.
It w i l l be f u l l y owned by Petromin.
T h r e e l a r g e e x p o r t r e f i n e r i e s a r e under c o n s t r u c t i o n ,
i n J u b a i l (250,000
bid).
b/d), Babigh (325,000 b/d) and Yanbu (250,000
The one in J u b a i l i s a j o i n t v e n t u r e between Petromin and
S h e l l and w i l l produce naphtha (97,000 b/d),
and h i g h s u l p h u r f u e l o i l (67,000 b/d).
gas o i l (92,000 b/d)
It is t o be completed i n
1985 a t an e s t i m a t e d c o s t of $1.4 b i l l i o n .
The r e f i n e r y in Yanbu w i l l b e o p e r a t e d j o i n t l y by
P e t r o m i n and Mobil.
I t s p r o d u c t i o n i s s e t t o d i e s e l o i l . and
h e a t i n g f u e l (71,000 b / d ) ,
(75,000 b/d),
h e a v y o i l (53,000 b / d ) g a s o l i n e
j e t f u e l (36,000 b/d) and naphtha (18,000 b/d).
It
was completed i n 1984 a t an e s t i m a t e d c o s t of $1.3 b i l l i o n .
The r e f i n e r y p r o j e c t i n R a b i g h i s a j o i n t v e n t u r e
between Petromin and t h e Greek f i r m P e t r o l a , and was i n t e n d e d t o
b e c o m p l e t e d i n 1984-85 b u t h a s b e e n d e l a y e d by a t l e a s t two
y e a r s ( s e e H a r v e y 1984).
Its investment c o s t i s estimated a t
$2.6 b i l l i o n .
Two r e f i n e r y p r o j e c t s a t Juaymah and Q a s s i n h a v e been
19
c a n c e l l e d and a t h i r d a t A l - S h u k a i k h has b e e n " s h e l v e d " s i n c e
September 1983.
I n S a u d i A r a b i a t h e p r o d u c t i o n of
a s s o c i a t e d t o t h a t of crude o i l .
n a t u r a l gas i s
I n t h e mid-l970's,
o n l y 15% of
t h e produced gas w a s u t i l i s e d , b u t by 1982 t h i s had i n c r e a s e d t o
42%.
The growth
i n n e t p r o d u c t i o n comes m a i n l y from t h e Ghawar
f i e l d , where a Master Gas S y s t e m (MSG) has been e s t a b l i s h e d a t a
c o s t of $12 b i l l i o n ( s e e
Arab O i l & Gas D i r e c t o r y , 1983, p283).
This g a s w i l l mainly be used as f e e d s t o c k i n t h e two i n d u s t r i a l
c o m p l e x e s a t J u b a i l a n d Yanbu, b u t p r o d u c t s f r o m t h e MSG w i l l
a l s o i n c l u d e LPG and g a s o l i n e f o r e x p o r t , for u s e in d o m e s t i c
i n d u s t r y , f o r e l e c t r i c i t y g e n e r a t i o n and f o r water d e s a l i n a t i o n .
The t o t a l s i z e of t h e MSG i s 625,000 b/d p r o c e s s e d a t
t h r e e p l a n t s a t B e r r i (71,300 b / d ) , Shedgum (270,000 b / d ) and
Uthmaniya (270,000 b / d ) ,
A t f u l l c a p a c i t y t h e MSG c a n p r o d u c e
290,000 b / d of sweet g a s , 537,000 b / d of NGL and 11.5 t o n n e s / d a y
of s u l p h u r .
The NGL i s t a k e n t o two f r a c t i o n a t i o n p l a n t s a t
Juaymah and Yanbu w i t h a p r o c e s s i n g c a p a c i t y of 390,000 b/d a n d
300,000 b / d r e s p e c t i v e l y .
T h e s e two p l a n t s p r o d u c e e t h a n e ,
propane, butane, pentane and n a t u r a l g a s o l i n e ,
Pipeline transportation plays a central r o l e i n the o i l
and g a s s e c t o r s i n S a u d i A r a b i a . Between 1950 a n d 1975 T a p l i n e
( t h e Trans-Arabian P i p e l i n e Company) o p e r a t e d a 1213 km p i p e l i n e
between Saudi Arabia and Lebanon w i t h a c a p a c i t y of 500,000 b/d.
A f t e r 1975 it w a s in use f o r s h o r t e r p e r i o d s o n l y , u n t i l I s r a e l i
bomb a t t a c k s f o r c e d it t o c l o s e down.
Inside S a u d i Arabia a b o u t
45 d i f f e r e n t p e t r o l e u m p i p e l i n e s a r e o p e r a t e d by Aramco and t h r e e
by P e t r o m i n ( s e e Arab O i l & Gas D i r e c t o r y , 1983, ~ 2 9 0 ) . Among
20
the
largest
and most
i m p o r t a n t a r e t h e two l o n g - d i s t a n c e
p i p e l i n e s connecting t h e o i l f i e l d s i n Abqaiq w i t h Yanbu a t t h e
Red Sea.
One of them c a l l e d P e t r o l i n e c a r r i e s crude o i l , and h a s
I t was c o m p l e t e d i n 1981 a t a
a c a p a c i t y of 1-85 m i l l i o n b / d ,
c o s t of $1.6 b i l l i o n ,
P e t r o l i n e h a s n e v e r o p e r a t e d a t f u l l c a p a c i t y . At t h e
b e g i n n i n g of 1 9 8 2 t h e f l o w was 1.35 m i l l i o n b/d.
I n s p i t e of
e x c e s s c a p a c i t y t h e f e a s i b i l i t y of i n c r e a s i n g c a p a c i t y by a n
a d d i t i o n a l 500,000 b / d ,
investigated.
up t o
m i l l i o n b/d
2.35
is being
The c o s t of t h i s expansion is e s t i m a t e d a t $800-
1 , 0 0 0 m i l l i o n . The e x p a n s i o n i s j u s t i f i e d o n t h e grounds t h a t
P e t r o l i n e can t h e n s u p p l y w e s t e r n r e f i n e r i e s in Yanbu and Rabigh
w i t h o i l from e a s t e r n f i e l d s .
There are a l s o p l a n s t o b u i l d a
l a r g e s i z e o i l s t o r a g e c a v e r n d i r e c t l y connected t o t h e w e s t e r n
end of P e t r o l i n e ,
Such a n i n v e s t m e n t w o u l d c o s t a b o u t $5,000
m i l l i o n ( s e e MEED, September 1983 and MEED, October 1983, ~13).
The s e c o n d p i p e l i n e l i n k i n g t h e A b q a i q o i l f i e l d s t o
Yanbu i s a h i g h - p r e s s u r e o n e f o r t h e t r a n s p o r t of N G L w h i c h w a s
c o m p l e t e d i n 1980.
I n t h i s w a y BGL p r o d u c e d a t Ghawar c a n b e
t r a n s f e r r e d t o Yanbu e i t h e r f o r e x p o r t o r u s e as a f e e d s t o c k i n
t h e Yanbu p e t r o c h e m i c a l complex.
F u r t h e r m o r e , p a r t of t h e NGL
w i l l be used a s a f u e l f o r t h e p a r a l l e l crude o i l l i n e .
The
c a p a c i t y of t h i s g a s p i p e l i n e i s 270,000 b/d of NGL and ethane.
Saudi Arabia has a l s o made s u b s t a n t i a l i n v e s t m e n t s in
p o r t capacities.
The port of Ras Tanura can s i m u l t a n e o u s l y f i l l
two s u p e r t a n k e r s (150,000-500,000 dwt).
accommodate s h i p s u p to 700,000 dwt.
The Juaymah p o r t c a n
At Z u l u f , t h e r e i s
8
21
1.7
million-barrel
f l o a t i n g storage vessel.
t h r e e tanker loading berths,
berths.
The p o r t a t Yanbu has
and t h e o n e a t R a b i g h has n i n e
The p o r t a t Yanbu w i l l be expanded s u b s t a n t i a l l y by t h e
e n d of t h e 1980s.
The Kingdom o p e r a t e s w i t h 30 r e g i s t e r e d
t a n k e r s w i t h a t o t a l c a p a c i t y of more t h a n 4 mil l i o n dwt.
Turning t o t h e p e t r o c h e m i c a l s e c t o r , t h e r e are now f o u r
p l a n t s i n o p e r a t i o n and s i x p r o j e c t s u n d e r w a y .
One of t h o s e
a l r e a d y i n o p e r a t i o n is t h e S a f c o f e r t i l i z e r p l a n t a t Dammam
which was completed i n 1968.
It u s e s n a t u r a l g a s as a f e e d s t o c k
a n d has o n e s u l p h u r r e c o v e r y u n i t (30 t o n n e s s u l p h u r / d a y + 50
tonnes
sulphuric acidlday),
one u r e a u n i t ( 6 0 0 t o n n e s
ammonia/day), o n e l a r g e r u r e a u n i t (1,100 t o n n e s u r e a j d a y ) as
w e l l as water d e s a l i n a t i o n and c o o l i n g u n i t s ,
steam b o i l e r s and
power g e n e r a t i o n u n i t s .
Another u n i t i n o p e r a t i o n i s Petromin’s
S u l p h u r i c Acid
P l a n t ( P e t r o c i d ) a t Dammam. This was completed i n 1 9 7 1 and has a
c a p a c i t y of 50 tonneslday.
A t J u b a i l , t h e Al-Jubail
F e r t i l i z e r Company i s a j o i n t
v e n t u r e between t h e Saudi A r a b i a n B a s i c I n d u s t r i e s C o r p o r a t i o n
(SASIC) a n d t h e Taiwan F e r t i l i z e r C o r p o r a t i o n .
The p l a n t came
i n t o o p e r a t i o n i n 1983 w i t h a n i n v e s t m e n t c o s t o f a b o u t $350
m i l lion.
I t h a s a c a p a c i t y of 300,000 t o n n e s / y e a r of l i q u i d
ammonia and 500,000 t o n n e s l y e a r of urea.
f a c i l i t i e s a v a i l a b l e with
8
There a r e a l s o s t o r a g e
c a p a c i t y of 20,000 tonnes of ammonia
and 100,000 tonnes of urea.
Also a t J u b a i l t h e Saudi Methanol Company (A1 Bazi) i s
a j o i n t v e n t u r e between SABIC and a J a p a n e s e consortium headed by
M i t s u b i s h i Gas.
22
I t produces 600,000 t o n n e s / y e a r of methanol, and
was c o m p l e t e d i n 1983 a t a n i n v e s t m e n t c o s t of a r o u n d $300
million.
O f t h e s i x p r o j e c t s under way, one is s i t u a t e d a t Yanbu
and f i v e a t J u b a i l . A t Yanbu, SABIC and Mobil O i l w i l l o p e r a t e a
j o i n t v e n t u r e c a l l e d Saudi Yanbu Petrochemical Company (YAMPET).
The p l a n t w i l l i n c l u d e a n e t h y l e n e p l a n t (450,000 t o n n e s l y e a r ) , a
low-density
p o l y e t h y l e n e p l a n t (200,000 t o n n e s l y e a r ) , a h i g h
d e n s i t y p o l y e t h y l e n e u n i t (90,000 t o n n e s l y e a r ) and a n e t h y l e n e
g l y c o l p l a n t (200,000 t o n n e s / y e a r ) .
The c o s t i s e s t i m a t e d a t
$2.5 b i l l i o n and t h e p r o j e c t w i l l be completed i n 1985.
A t J u b a i l , the Al-Jubail
is
8
P e t r o c h e m i c a l Company (Remya)
j o i n t v e n t u r e b e t w e e n SABIC and Exxon.
i n v e s t m e n t c o s t e s t i m a t e d a t $1.1
The p l a n t , w i t h a n
b i l l i o n , w i l l produce 260,000
t o n n e s l y e a r of low d e n s i t y p o l y e t h y l e n e (LDP).
It w i l l come i n t o
o p e r a t i o n in 1985.
The S a u d i P e t r o c h e m i c a l Company (SADAF) i s a j o i n t
v e n t u r e between SABIC and Pecten, a s u b s i d i a r y of S h e l l O i l .
Its
c o m p l e x at J u b a i l w i l l h a v e an a n n u a l p r o d u c t i o n c a p a c i t y of
656,000 t o n n e s / y e a r of e t h y 1ene, 295,000 t o n n e s / y e a r of s t y r e n e ,
281,000 t o n n e s / y e a r of i n d u s t r i a l e t h a n o l , 454,000 t o n n e s / y e a r of
e t h y l e n e d i c h l o r i d e , 377,000 t o n n e s / y e a r of c a u s t i c soda, 333,000
t o n n e s / y e a r of c h l o r i n e and 327,000 t o n n e s / y e a r of ethy lbenzene.
The i n v e s t m e n t c o s t is e s t i m a t e d a t $2.9 b i l l i o n and t h e p l a n t is
t o be completed i n 1985.
The A r a b i a n P e t r o c h e m i c a l Company ( P e t r o k e r n y a ) i s
owned by SABIC.
It w i l l produce 500,000 t o n n e s / y e a r of e t h y l e n e
and 350,000 t o n n e s / y e a r of e t h y l e n e g l y c o l .
I t s investment c o s t
23
i s e s t i m a t e d a t $1.5 b i l l i o n and t h e p l a n t w i l l b e completed i n
1985.
The E a s t e r n P e t r o c h e m i c a l Company ( S h a r q ) i s a j o i n t
v e n t u r e b e t w e e n SABIC and a J a p a n e s e c o n s o r t i u m ,
This J u b a i l
p l a n t i s t o b e c o m p l e t e d i n 1985 and w i l l h a v e a p r o d u c t i o n
c a p a c i t y of 180,000 t o n n e s / y e a r f o r low d e n s i t y p o l y e t h y l e n e and
300,000 t o n n e s l y e a r f o r e t h y l e n e g l y c o l .
The t o t a l i n v e s t m e n t
c o s t is e s t i m a t e d a t $1.5 b i l l i o n .
The N a t i o n a l Methanol Company ( I b n Sinaq) is a j o i n t
v e n t u r e b e t w e e n SABIC ( 5 O X ) , C e l a n e s e A r a b i a n ( 2 5 x 1 , and T e x a s
E a s t e r n A r a b i a n (25%).
The p l a n t w i l l p r o d u c e m e t h a n o l w i t h a
c a p a c i t y of 650,000 t o n n e s l y e a r .
I t w a s c o m p l e t e d i n 1984 and
t h e t o t a l c o s t is e s t i m a t e d a t $400 m i l l i o n .
For m o s t of t h e s e p r o j e c t s e t h a n e and m e t h a n e a r e t h e
f e e d s t o c k s , w h i c h a r e t o b e s u p p l i e d by P e t r o m i n .
S h a r q and
K e m y a w i l l g e t t h e i r s u p p l i e s of e t h y l e n e from P e t r o k e m y a a n d
Sadef r e s p e c t i v e l y .
When a l l t h e petrochemical i n v e s t m e n t s have been made,
SABIC w i l l b e a b l e t o p r o d u c e a b o u t 1.6 m i l l i o n t o n n e s / y e a r o f
ethylene,
and 1.3 m i l l i o n t o n n e s l y e a r of u r e a , a s w e l l as minor
q u a n t i t i e s of o t h e r petrochemicals.
In addition,
S a u d i A r a b i a h a s a l l o c a t e d a l o t of
c a p i t a l t o o t h e r areas of i n d u s t r i a l development.
Examples a r e
$5.0 b i l l i o n for t h e a i r p o r t i n J e d d a h ( s e e B a i l e y 19811, $3.2
b i l l i o n f o r t h e a i r p o r t in R i y a d h ,
$1.1 b i l l i o n f o r a w a t e r
p i p e l i n e b e t w e e n J u b a i l and R i y a d h ( s e e O'Sull i v a n 19801, $425
m i l l i o n and $430 m i l l i o n r e s p e c t i v e l y f o r water p i p e l i n e s t o A s i r
and between Shuaiba and Mecca,
24
$370 m i l l i o n f o r a power s t a t i o n
a t Riyadh, and a b o u t $275 m i l l i o n f o r s i l o s a t Riyadh, Dammam,
Jeddah, Q a s s i n and Khamis.
Saudi I r o n & S t e e l Company (Hadeed) has i n v e s t e d about
$700 m i l l i o n in one p l a n t a t J u b a i l i n o r d e r t o produce 800,000
t o n n e s l y e a r of sponge i r o n and s t e e l b i l l e t s , rods and bars.
It
i s o p e r a t e d a s a j o i n t v e n t u r e b e t w e e n SABIC a n d K o r k - S t a h l o f
West Germany,
Saudi-Kuwait
Another j o i n t v e n t u r e has been set up as t h e
Cement M a n u f a c t u r i n g Company.
SABIC
is a l s o
i n v o l v e d i n two l a r g e s c a l e a l u m i n i u m p r o j e c t s o u t s i d e S a u d i
Arabia ( s e e MEED, November 1983).
A t present, Saudi Arabia has an outstanding record i n
t e r m s of d o m e s t i c i n v e s t m e n t s .
main
areas:
distribution.
refineries,
They a r e c o n c e n t r a t e d in t h r e e
petrochemical
plants
and
gas
The i n v e s t m e n t e x p e n d i t u r e e x c e e d s $35 b i l l ion.
T a b l e 6 g i v e s a n o v e r v i e w of t h e a c t u a l p r o j e c t s i n terms of
d a t e s , c o s t s and o r g a n i s a t i o n .
25
The United Arab Emirates (UAE) w a s c o n s t i t u t e d i n 1971
a s a u n i o n b e t w e e n s i x of t h e " T r u c i a l " S t a t e s
-
Abu D h a b i ,
D u b a i , S h a r j a h , Umm a l - Q i w a i n , Ajman and F u j a i r a h .
l a t e r Ras al-Khaimah j o i n e d t h e group.
Two months
These s e v e n s t a t e s w i t h a
p o p u l a t i o n o f a b o u t 1.1 m i l l i o n i n a n a r e a of 8 3 . 6 5 0 km2 ( l e s s
t h a n t h a t of P o r t u g a l ) p o s s e s s o i l r e s e r v e s as l a r g e as t h o s e of
North America, and 3% of world g a s r e s e r v e s .
I n 1939 t h e T r u c i a l Coast Development O i l Company was
g i v e n t h e first o i l concession of Abu Dhabi.
The f i r s t w e l l was
d r i l l e d i n 1950, b u t i t was n o t u n t i l 1960 t h a t oil w a s found a t
Bab.
F u r t h e r d i s c o v e r i e s were t h e n made a t B u t t a s a in 1962, a t
Asab i n 1965, a t S a h i l i n 1972 and a t J o r m Y a f o u r i n 1973.
At
t h a t t i m e t h e company had changed i t s name t o t h e Abu D h a b i
Petroleum Company (ADPC).
In 1953 t h e d'Arcy
O i l Company L t d g o t
8
c o n c e s s i o n r i g h t f o r t h e d e v e l o p m e n t of Abu Dhabi's
areas.
A new company
-
6 5 years'
offshore
t h e Abu Dhabi Areas Company (ADMA)
formed i n o r d e r t o make u s e of this concession.
- was
O i l was found a t
Umm Shaif in 1959 and a t Zakum i n 1965.
T h e Abu D h a b i N a t i o n a l O i l Company ( A D N O C )
was
c o n s t i t u t e d i n 1 9 7 1 i n o r d e r t o g i v e t h e Government g r e a t e r
26
control over the o i l sector.
I n 1 9 7 2 i t t o o k o v e r 25% of t h e
s h a r e s of ADPC and ADMA, f o l l o w e d by a n a d d i t i o n a l 35% i n 1974.
For o p e r a t i o n a l r e a s o n s two new s u b s i d i a r i e s were formed, namely
ADMA-OPCO i n 1977 and ADC0 i n 1978.
more than 90% of Abu Dhabi’s
These two companies produce
crude o i l output.
The Abu D h a b i Company L t d (ADOCO) was g r a n t e d a n
o f f s h o r e concession i n 1967.
O i l w a s d i s c o v e r e d a t Mubarras in
1969.
In 1 9 7 3 , t h e T o t a l Abu a l - B u k h o o s h O i l Company (TAB)
was e s t a b l i s h e d i n o r d e r t o d e v e l o p t h e Abu al-Bukhoosh
field.
O i l had been d i s c o v e r e d by ADMA i n 1969.
A c o n s o r t i u m h e a d e d b y Amerada H e s s h a s o b t a i n e d a n
o f f s h o r e concession r e l i n q u i s h e d by ADMA.
Oil was d i s c o v e r e d in
1972 s o u t h of Arzanah I s l a n d .
The Abu Dhabi Marine Areas (ADMA) manage t h e Al-Bunduq
f i e l d i n c o o p e r a t i o n w i t h Qatar ( s e e S e c t i o n 3 above).
The Abu
Dhabi s t a t e owned company N a t i o n a l Petroleum C o n s t r u c t i o n Company
(NPCC) h a s b e e n w o r k i n g on a programme of w a t e r i n j e c t i o n and
enhanced r e c o v e r y a t t h i s f i e l d s i n c e 1981.
The f i r s t o i l concession of Dubai was g i v e n t o t h e I r a q
P e t r o l e u m Company i n 1937.
In 1 9 6 3 , t h e U S company Conoco t o o k
over t h i s concession and e s t a b l i s h e d t h e Dubai P e t r o l e u m Company
(DPC)
.
In 1 9 5 4 Compagnie F r a n c a i s e d e s P e t r o l e s (CFP) a n d
H i s p a n o i l had e s t a b l i s h e d Dubai Marine Areas Ltd (DUMA) i n o r d e r
t o manage a n o f f s h o r e c o n c e s s i o n i n Dubai.
Then, i n 1 9 6 3 , DPC
a c q u i r e d 50X of DUMA’S c o n c e s s i o n , b u t s o l d some of i t one y e a r
later
t o Wintershall,
T e x a c o and Sun O i l ,
The DUMA-DPC
27
c o o p e r a t i o n has l e d t o d i s c o v e r i e s and p r o d u c t i o n of o i l i n f o u r
fields
-
Fateh (14661, F a t e h South-West (19701, Rashid (1973) and
F a l a h (1976).
A s n o o f f s h o r e i s l a n d i s a v a i l a b l e , DPC h a s
c o n s t r u c t e d t h r e e underground s t o r a g e t a n k s ("khazzans"),
each i n
t h e f o r m of a g i a n t i n v e r t e d champagne g l a s s ( s e e D i x o n , 1983).
Arc0 I n t e r n a t i o n a l O i l and Gas Company, a s u b s i d i a r y t o
A t l a n t i c R i c h f i e l d , o b t a i n e d a n onshore concession i n 1980. One
year l a t e r t h e B r i t i s h N a t i o n a l O i l C o r p o r a t i o n (BNOC) took o v e r
o n e - t h i r d of i t . Then, i n 1982, o i l and g a s were d i s c o v e r e d a t
t h e Margham f i e l d .
DUMA-DPC accounts f o r t h e total c r u d e o i l p r o d u c t i o n i n
Dubai u n t i l t h e Margham f i e l d comes i n t o o p e r a t i o n ,
A t the t i m e
when o t h e r OPEC c o u n t r i e s were f o r c e d t o c u t t h e i r p r o d u c t i o n ,
D u b a i s u c c e e d e d in k e e p i n g i t s p r o d u c t i o n a l m o s t c o n s t a n t a t a
l e v e l of about 350,000 b/d2.
I n Shar ia,
t h e C r e s c e n t P e t r o l e u m Company ( C P C )
o b t a i n e d an o f f s h o r e c o n c e s s i o n a t Abu Musa i n 1970.
O i l was
d i s c o v e r e d a t t h e H u b a r a k f i e l d i n 1972 a n d o i l p r o d u c t i o n
s t a r t e d in 1974.
However, t h e p r o d u c t i o n l e v e l has d e c l i n e d
s u b s t a n t i a l l y s i n c e then.
Amoco, a s u b s i d i a r y of Standard O i l Company of I n d i a n a ,
obtained a concession i n 1978 f o r an a r e a a t t h e border w i t h
Oman.
I n 1980 o i l was d i s c o v e r e d a t S a j a a ,
and p r o d u c t i o n
s t a r t e d i n 1982.
Mubarak a n d S a j a a a r e t h e o n l y p r o d u c i n g f i e l d s i n
Sharjah.
W h i l e t h e p r o d u c t i o n a t Mubarak h a s d e c l i n e d f r o m
60,000 b/d i n 1974 t o 9,900 b/d i n 1980, t h e Sajaa f i e l d s t a r t e d
28
i n 1982 a t a
r a t e of 25,000 b / d o f l i g h t o i l and 7 m i l l i o n
rn3 / d a y of n a t u r a l g a s , w i t h t h e g o a l of p r o d u c i n g f o u r t i m e s a s
much i n f o u r years.
I n Ras al-Kaimah s e v e r a l e f f o r t s t o o b t a i n crude o i l
were made,
b u t s o f a r t h e r e h a s b e e n no d i s c o v e r y w o r t h
commercial e x p l o i t a t i o n .
Umm a l - Q i w a i n f o u n d n a t u r a l g a s i n 1 9 7 6 but n o c r u d e
o i l has yet been obtained.
The two r e m a i n i n g e m i r a t e s F u i a i r a h and Aiman h a v e
announced p l a n s for d r i l l i n g , b u t no r e a l p r o g r e s s has yet been
made.
In t o t a l , t h e c r u d e o i l p r o d u c t i o n of t h e UAE r e a c h e d
i n 1977,
i t s peak
but since then,
s u b s t a n t i a l l y . As i n
o u t p u t has d e c l i n e d
t h e o t h e r Gulf c o u n t r i e s , t h e UAE h a v e
t r i e d t o expand p r o d u c t i o n of r e f i n e d products. (see T a b l e 7).
Before 1976,
available.
Nar w i t h
t h e UAE had
no r e f i n e r y c a p a c i t y
I n t h a t year Abu Dhabi opened i t s r e f i n e r y a t Umm a l a c a p a c i t y of 15,000 b/d.
Feedstock
comes by p i p e l i n e
f r o m Bab.
A s t h e o r i g i n a l r e f i n e r y a t Umm al-Nar
soon proved t o
b e i n s u f f i c i e n t , ADNOC took t h e d e c i s i o n t o b u i l d a s e c o n d
r e f i n e r y a t t h e same p l a c e b u t w i t h a c a p a c i t y four t i m e s a s
l a r g e (60,000 b/d),
The new r e f i n e r y i s s c h e d u l e d t o come i n t o
o p e r a t i o n in 1985.
In c o n n e c t i o n w i t h t h i s new r e f i n e r y , two
d e s a l i n a t i o n units w i l l be a v a i l a b l e a t a c o s t of Dh 105 m i l l i o n
(about $28 m i l 1ion),
I n 1 9 7 7 ADNOC announced t h a t an a d d i t i o n a l r e f i n e r y was
t o b e b u i l t a t Ruwais.
I t s i n i t i a l c a p a c i t y w a s s e t a t 120,000
29
b / d , w h i c h became a v a i l a b l e i n 1981, t h e i n v e s t m e n t c o s t s were
I n 1 9 8 2 , h o w e v e r , it was d e c i d e d t o expand t h i s
$600 m i l l i o n .
c a p a c i t y by 45,000 b/d a t a c o s t of about $300 m i l l i o n .
The main p r o d u c t s from t h e Umm al-Nar r e f i n e r y a r e g a s
oil,
f u e l o i l and g a s o l i n e ,
c o n c e n t r a t e s on f u e l o i l ,
gas o l i n e
w h i l e t h e Ruwais r e f i n e r y
gas o i l ,
naphtha,
k e r o s e n e and
.
I n 1 9 7 4 , K u w a i t and Abu D h a b i s i g n e d a c o n t r a c t t o
b u i l d a 100,000 b / d r e f i n e r y i n Ras a l - K h a i m a h w i t h c r u d e o i l
d e l i v e r i e s coming from Kuwait.
N a t u r a l g a s p l a y s a n i m p o r t a n t r o l e in t h e e n e r g y
s e c t o r of t h e UAE.
Most o f t h e gas i s a s s o c i a t e d .
I n Abu D h a b i
t h e o n s h o r e f i e l d s of Asab, Bab a n d B u t t a s a a r e s u p p l i e d w i t h
t r e a t m e n t f a c i l i t i e s and c o n n e c t e d t h r o u g h p i p e l i n e s t o t h e
Ruwais f r a c t i o n i n g p l a n t .
T h i s p r o c e s s i n g and d i s t r i b u t i o n
s y s t e m ( t h e Gasco p r o j e c t ) was c o n s t r u c t e d i n 1977-81 a t a c o s t
of
$2,120 m i l l i o n 3 .
produce
At c a p a c i t y t h e f r a c t i o n i n g p l a n t c a n
4 6 , 0 0 0 b / d of p r o p a n e , 46,000 b / d of b u t a n e and 67,000
b/d of pentrane.
A s s o c i a t e d g a s f r o m t h e o f f s h o r e f i e l d s of Umm S h a i f ,
Upper Zakum and Lower Zakum i n c o m b i n a t i o n w i t h n o n - a s s o c i a t e d
g a s (cap gas) from Uweinat and Thamama F w i l l p r o v i d e 7 m i l l i o n
m3/day of i n p u t t o a n LNG p l a n t on Das I s l a n d ,
T h i s p l a n t came
i n t o o p e r a t i o n i n 1979, w i t h t h e purpose of p r o v i d i n g Japan w i t h
LNG and LPG.4
I n a second p h a s e , t h i s p l a n t w i l l be p r o v i d e d
w i t h s e v e n s t o r a g e t a n k s ( t h r e e for LNG and four f o r LPG) a t a n
i n v e s t m e n t c o s t o f a b o u t $570 m i l l i o n ( s e e MEED,
1983).
30
19 August,
I n D u b a i , a n LPG p l a n t h a s b e e n in o p e r a t i o n s i n c e
1980
w i t h a p r o d u c t i o n c a p a c i t y of 1.5 m i l l i o n m 3 / d a y of d r y
gas.
Most of t h e g a s is u s e d as f e e d s t o c k for t h e a l u m i n i u m
p l a n t a t J e b e l A l i . The LPG p l a n t s i m u l t a n e o u s l y produces 11,000
b/d of propane,
7,000 b/d of b u t a n e and 7,000 b/d of condensates.
The i n v e s t m e n t c o s t f o r this LPG p l a n t w a s $400 m i l l i o n and i t
was f i n a n c e d t h r o u g h two E u r o l o a n s , o n e i n 1 9 7 7 a n d a n o t h e r i n
1 9 7 9 , a m o u n t i n g t o $230 m i l l i o n and $120 m i l l i o n r e s p e c t i v e l y
(see Arab O i l & Gas D i r e c t o r y , 1983, ~ 3 8 1 ) .
I n Sharjah, t h e r e i s an ambitious p r o j e c t t o c o n s t r u c t
a g a s p i p e l i n e from t h e Sajaa f i e l d t o an onshore p l a n t f o r
the
p r o d u c t i o n of 1 3 , 0 0 0 b / d of LPG, 7,500 b / d of p r o p a n e and 6 , 0 0 0
b / d o f b u t a n e ( s e e D i x o n 1 9 8 3 , p.23).
The t o t a l c o s t i s
e s t i m a t e d a t $300 m i l 1ion.
S e v e r a l i m p o r t a n t i n v e s t m e n t s h a v e b e e n made in t h e
transport sector.
I n 1 9 7 7 , i t was d e c i d e d t o b u i l d a 1 0 2 km
u n d e r w a t e r p i p e l i n e b e t w e e n t h e o f f s h o r e Zakum f i e l d and Abu
The c o s t was e s t i m a t e d a t $20.5 m i l l i o n .
Dhabi.
Terminals have
been b u i l t a t J e b e l Dhama, Das I s l a n d , Abu al-Bukhoosh,
Mubarraz,
Delrna I s l a n d ( f o r $750 m i l l i o n ) and a t Z i r k u I s l a n d ( f o r $600
m i l lion)
.
Abu Dhabi has i n v e s t e d i n s e v e r a l t a n k e r s .
One 269,000
dwt t a n k e r was c o n s t r u c t e d i n 1975 ( a t a c o s t of $34.5 m i l l i o n ) ,
one 260,000 dwt t a n k e r a l s o in 1975 and one 136,000 dwt t a n k e r i n
1976.
In a d d i t i o n t h e Abu D h a b i N a t i o n a l T a n k e r s Company h a s
ordered s e v e n o t h e r petroleum p r o d u c t tankers.
I n t h e p e t r o c h e m i c a l s e c t o r ADNOC has o r g a n i s e d a j o i n t
31
v e n t u r e w i t h Compagnie F r a n c a i s e d e s f e t r o l e s (CFP) t o c o n s t r u c t
a f e r t i l i s e r complex a t Ruwais.
Associated gas w i l l b e used a s
f e e d s t o c k i n o r d e r t o produce u r e a (1,500 t o n n e s l d a y ) and ammonia
(1,000 t o n n e s l d a y ) .
The o u t p u t w i l l b e e x p o r t e d .
The p l a n t is
a l m o s t ready f o r o p e r a t i o n and w i l l have r e q u i r e d $200 m i l l i o n i n
investments.
A PVC p i p e p r o d u c t i o n p l a n t h a s b e e n o p e r a t i n g a t
Masfah i n Southern Abu Dhabi s i n c e 1976.
Also in Abu Dhabi a f e r t i l i s e r p l a n t has been producing
u r e a (75,000 t o n n e s l y e a r ) and ammonia ( 3 0 0 , 0 0 0 t o n n e s l y e a r ) a t
Multan s i n c e 1979.
Another f e r t i l i s e r p l a n t w i t h an e s t i m a t e d
i n v e s t m e n t c o s t of $300 m i l l i o n i s c l o s e t o o p e r a t i o n .
It w i l l
a l s o p r o d u c e u r e a (500,000 t o n n e s / g e a r ) and ammonia (330,000
tonneslyear),
I n Dubai,
t h e world's
l a r g e s t d r y d o c k came i n t o
o p e r a t i o n in 1979 a t a c o s t of $485 m i l l i o n . However, i t has been
of v e r y l i t t l e use up t o t h e p r e s e n t t i m e (see The Economist, 19
February, 1983, p30).
In 1976, a n aluminium smelter w a s c o n t r a c t e d i n Dubai.
I t s c a p a c i t y is i n t e n d e d t o b e 1 3 5 , 0 0 0 t o n n e s / y e a r .
In
c o n n e c t i o n w i t h t h i s p l a n t t h e r e w i l l be a d e s a l i n a t i o n p l a n t and
a power s t a t i o n .
The t o t a l c o s t o f t h e p r o j e c t i s e s t i m a t e d a t
more t h a n $1,000 m i l l i o n .
l o a n s ( f o r $380 m i l l i o n ,
I t i s f i n a n c e d by t h r e e d i f f e r e n t
$230 m i l l i o n a n d $225 m i l l i o n
r e s p e c t i v e l y ) . D u b a i dry g a s w i l l b e u s e d a s a f e e d s t o c k a n d
t h e r e w i l l a l s o be a s u p p l y of g a s from Abu Dhabi.
I n v e s t m e n t s i n t h e U n i t e d Arab E m i r a t e s a r e m a i n l y
concentrated i n r e f i n e r i e s ,
32
gas p r o c e s s i n g and g a s d i s t r i b u t i o n
in Abu D h a b i .
An overview of t y p e s o f p l a n t s , d a t e s , c o s t s and
organisations i s given i n Table 8.
33
This
p r e s e n t a t i o n has
been devoted
i n v e s t m e n t s i n t h e f o u r "low-absorbing"
t o petroleum
OPEC c o u n t r i e s ; Kuwait,
Q a t a r , S a u d i A r a b i a and t h e U n i t e d Arab E m i r a t e s , for t h e ten
year p e r i o d 1973-82.
The r e s u l t s a r e as f o l l o w s :
U p t o 1 9 7 5 i n v e s t m e n t i n t h e p e t r o l e u m s e c t o r was
dominated by oil e x t r a c t i o n .
T h i s is no l o n g e r t h e case,
e x p e n d i t u r e i s c o n c e n t r a t e d on n o n - a s s o c i a t e d
First,
n a t u r a l gas t o
obtain a feedstock f o r c e r t a i n basic industries.
Examples a r e
d e v e l o p m e n t of t h e Khuff f i e l d and t h e N o r t h f i e l d i n Qatar.
Secondly,
s u b s t a n t i a l c a p i t a l o u t l a y s are also d i r e c t e d to t h e
u s e of a s s o c i a t e d g a s .
F o r e x a m p l e , t h e d e v e l o p m e n t of t h e
Master Gas System i n Saudi A r a b i a has g e n e r a t e d o u t l a y s of about
$12 b i l l i o n .
Thirdly,
s i n c e about 1980 a n n u a l c a p i t a l
e x p e n d i t u r e s f o r l i q u i f i e d n a t u r a l gas (LNG) h a v e b e e n l a r g e r
than f o r o i l and g a s e x t r a c t i o n t o g e t h e r ,
The annual o u t l a y s f o r
r e f i n e r y c o n s t r u c t i o n a r e a l s o n o t f a r from t h i s amount ( s e e
F i g u r e 1).
T h i s r e c e n t and m a s s i v e c o n c e n t r a t i o n of
capital
e x p e n d i t u r e on n a t u r a l g a s a n d d o w n s t r e a m a c t i v i t i e s i s
u n d e r s t a n d a b l e in t h e s e c o u n t r i e s w h i c h a t p r e s e n t a r e l o s i n g
t h e i r market s h a r e s of
34
c r u d e oils,
But i t s m a g n i t u d e ,
concentrated i n such a s h o r t t i m e period,
r a i s e s questions
concerning t h e demand f o r r e f i n e r y p r o d u c t s ,
p e t r o c h e m i c a l s and
LNG.
R e f i n e r i e s a r e being expanded s i m u l t a n e o u s l y i n Mina a l -
Ahmadi and Mina A b d u l l a h (Kuwait), i n Urn Said (Qatar) in J u b a i l ,
Yanbu and Rabigh (Saudi Arabia) and in Ruwais and Umm al-Mar (Abu
Dhabi).
An e q u a l l y s h o r t p e r i o d of t i m e i s being d e v o t e d t o t h e
expansion of LNG c a p a c i t y a t Ras L a f f a n (Qatar) and a t Das I s l a n d
(Abu D h a b i ) .
Petrochemical plants are being developed
s i n u l t a n e o u s l y a t S h u a i b a ( K u w a i t ) , a t Umm S a i d ( Q a t a r ) , a t
J u b a i l and Yanbu (Saudi Arabia) and a t R u w a i s (Abu Dhabi).
T h i s b r i n g s u s t o t h e c o n c l u s i o n t h a t K u w a i t , Qatar,
S a u d i A r a b i a a n d t h e U n i t e d Arab E m i r a t e s h a v e s i m u l t a n e o u s l y
chosen to e n t e r on a l a r g e s c a l e t h e m a r k e t s f o r r e f i n e r y
p r o d u c t s , f o r 1i q u i f i e d n a t u r a l g a s , and f o r petrochemicals.
It
is obvious t h a t t h e s e c o u n t r i e s w i l l f a c e s t r o n g c o m p e t i t i o n w i t h
e x i s t i n g producers.
However,
t h e s t r o n g e s t c o m p e t i t i o n w i l l be
b e t w e e n t h e four c o u n t r i e s t h e m s e l v e s .
To some e x t e n t such
t e n s i o n s h a v e been e l i m i n a t e d through j o i n t v e n t u r e s w i t h Western
f i r m s , where e x i s t i n g market c h a n n e l s can be used,
Examples a r e
t h e i n v o l v e m e n t of She1 1 and Mobil O i l i n S a u d i r e f i n e r ies and
w i t h B r i t i s h Petroleum i n t h e North F i e l d gas e x t r a c t i o n i n
Qatar.
Such t e n s i o n s h a v e a l s o b e e n r e d u c e d t h r o u g h d i r e c t
i n v e s t m e n t i n f o r e i g n p e t r o l e u m f irrns w i t h an e x i s t i n g c a p a c i t y
t o d i s t r i b u t e and s e l l t h e s e p r o d u c t s ,
e x a m p l e i s Kuwait’s
The m o s t i n t e r e s t i n g
t a k e o v e r of Gulf’s d i s t r i b u t i o n n e t w o r k in
Northern Europe.
The c o n c l u s i o n of t h i s a n a l y s i s i s t h a t t h e r e is a
s t r o n g need t o i n v e s t i g a t e f u r t h e r t h e i n d u s t r i a l o r g a n i s a t i o n of
35
t h e petroleum s e c t o r and r e l a t e d a c t i v i t i e s .
Special attention
s h o u l d then be g i v e n t o t h e comparative a d v a n t a g e or d i s a d v a n t a g e
of t h e Gulf c o u n t r i e s i n t h e p r o d u c t i o n ,
t r a n s p o r t a t i o n and
marketing of o i l products.
A systems approach i s necessary to carry o u t t h i s task.
R e f i n e r i e s and p e t r o c h e m i c a l p l a n t s a r e s o i n t e r d e p e n d e n t t h a t i t
i s o f t e n impossible t o study production separately.
The same
i n t e r d e p e n d e n c y c o n c e r n s t h e e x t r a c t ion of o i l and a s s o c i a t e d
gas.
Production c o s t s and s a l e s p r i c e s have t o be a n a l y s e d f o r
d i f f e r e n t c o n f i g u r a t i o n s of p l a n t s .
C o s t s of t r a n s p o r t a t i o n must
b e compared i n order t o d i s c o v e r t h e c o m p a r a t i v e a d v a n t a g e of
each new p l a n t i n d i f f e r e n t markets.
The i n v e s t m e n t programme c a r r i e d out by t h e f o u r Gulf
c o u n t r i e s o v e r t h e p e r i o d 1973-82 is o u t s t a n d i n g i n modern times.
It would be e x t r e m e l y i n t e r e s t i n g t o a n a l y s e what e f f e c t it has
had and w i l l h a v e on t h e i n d u s t r i a l o r g a n i s a t i o n of t h e p e t r o l e u m
sector.
8 tudy
36
.
P r o j e c t e v a l u a t i o n procedures must be c e n t r a l t o such a
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1.
In p a r a l l e l w i t h t h i s development, KPC h a s t a k e n o v e r Gulf
O i l ' s r e f i n e r i e s and d i s t r i b u t i o n n e t w o r k i n B e l g i u m , t h e
N e t h e r l a n d s , Luxemburg and Scandinavia. At a c o s t of about
$150m R P C g o t a c c e s s t o a 7 5 , 0 0 0 b / d r e f i n e r y and t h e
Europort l u b e p l a n t i n the N e t h e r l a n d s (see MEED, May 1983
p9).
2.
The p r e r e q u i s i t e f o r t h i s b e h a v i o u r h a s been
s i m u l t a n e o u s d e c l i n e i n output from Abu Dhabi.
3,
Out of t h i s amount $ 1 , 6 9 4 m i l l i o n was f i n a n c e d by t h e Abu
Dhabi Investment Authority.
4.
There have been s e v e r a l inc,idents a t t h i s o p e r a t i o n caused
by poor q u a l i t y equipment ( s e e McKechnie 1983 ~174).
the
45
Arab O i l and Gas D i r e c t o r y (1983):
The Arab P e t r o l e u m Research
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47
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