EVERYTHING’S REFINE

UAE, Abu Dhabi 2014 | ENERGY | INTERVIEW

TBY talks to Jasem Ali Al-Sayegh, CEO of Takreer, on the Ruwais refinery, growth in the northern Emirates, and the importance of Emiratization.

Jasem Ali Al-Sayegh
BIOGRAPHY
Jasem Ali Al-Sayegh is a chemical engineer and graduate of the University of Washington. He began working for the Abu Dhabi National Oil Company (ADNOC) in 1986. He managed both Abu Dhabi and Ruwais Refineries following the establishment of Takreer in 1999 to take over ADNOC’s refining business. In 2003, he became a member of the Takreer General Management Team before being appointed General Manager of the company in 2006. Today, as the CEO of Takreer, he is currently supervising the $10 billion expansion of the Ruwais Refinery, a mega project that aims to double the quantity and improve the quality of the company’s refined products.

The $10 billion Ruwais Refinery Expansion (RRE) will be the largest in the region. How important is a site of this size for energy security in the UAE?

The project was planned and developed to serve three main objectives. The first is to meet the expected growth in local demand, especially in gasoline, and also to provide feedstock for the planned downstream petrochemicals industry, mainly through increased naphtha production. The second objective is to maintain the presence of Abu Dhabi National Oil Company (ADNOC) in the international market for refined products. As the country grows, local demand rises, and this reduces the export quantities of refined products. Once the project is commissioned, ADNOC's presence in the international market for refined products will be retained as export quantities increase. The third objective is to integrate the refining and petrochemicals industries. This is extremely important because both businesses have been expanding, and ADNOC has concluded that such integration is essential to optimize costs. Thus, the RRE and Borouge 3 were designed in an integrated manner from the outset. We will be exporting propylene and importing hydrogen, which will reduce capital expenditure and operating costs for both companies.

How will the project contribute to the government's target of being petrol self-sufficient by the end of 2013?

After we commission the project, we will be self sufficient in gasoline and will also have extra capacity for the next 10 years. Having said that, other initiatives are also in motion in Abu Dhabi, such as promoting compressed natural gas (CNG) as a transportation fuel, especially for the public sector. The aim is to reduce our reliance on oil and gasoline, mainly from an environmental perspective, as CNG is cleaner.

What other plans does Takreer have in the short to medium term to expand its downstream operations?

All of our plans for the refining industry have been fulfilled, and today we're consolidating and making sure that our investments are yielding the right results. The last project that Takreer was awarded was the Carbon Black and Delayed Coker Project, a heavy oil conversion scheme. It is in the detailed engineering stage and construction will start soon. The project will convert all of the heavy oil generated by both refineries, as well as the new refinery, into lighter products and specialty products such as carbon black, which will be used by Borouge, and calcined coke, which will be used by local aluminum firms such as EMAL. The project will ensure that the two plants become full-conversion refineries, and will bring our refinery to a high level of capacity and complexity, which will make for highly profitable operations once the project is commissioned.

“After we commission the project, we will be self sufficient in gasoline. "

Given fluctuating crude prices, what are the challenges for companies such as Takreer to enforce cost-control measures, while also ensuring that state-of-the-art technology is available?

Cost-control measures are extremely important in terms of ensuring that we have an efficient operation. We always benchmark ourselves with other refineries, mainly in Singapore or Rotterdam. We avail of Solomon Associates, which is a well-known benchmark agency for the refining industry. We use best practices and the findings of benchmark studies to make sure that our costs are managed properly. However, we recognize that there are always fluctuations in crude and product prices, and that any sharp increases or decreases can affect our margins positively or negatively. This could annul the cost-control measures adopted by companies. Therefore, we thoroughly study the application of any particular cost control measure. We never cut corners on safety and maintenance, which are crucial for us, and never make compromises.

What are some of the challenges companies like Takreer face in today's rapidly changing market?

In the wake of the global financial crisis, all refineries have been facing difficulties, especially old and less-complex ones, many of which are operating below capacity or closing down. We have taken actions with our new projects that will increase our capacity and complexity to ensure that our margins are always at least positive. Another challenge is cyber security, and many companies are working to first secure their operations followed, by other systems such as finance and human resources.

How does growth in the northern Emirates contribute to the increase in local demand, and what increases have you seen in the international market?

For us, the northern Emirates always featured in ADNOC's forecast planning, and growth there is also being taken into consideration. We are building a terminal for ADNOC Distribution at the Hamriya Free Zone to cater to local growth, and it will distribute our products directly in Sharjah and the northern Emirates. With this new terminal, we can ship refined products in bulk from Ruwais Refinery and unload and distribute them to customers, which is much more convenient from a logistics perspective. Regarding the international market, growth is mostly seen in the East—mainly China and India, as well as the Middle East to a certain extent. However, demand for refined products has declined in the US, Europe, and Japan due to the financial crisis that hit those markets.

The US has increased its refining capacity, reducing its reliance on Nigerian and Algerian oil. What effect do you think growing US oil production will have on the UAE?

This mainly concerns shale oil and gas, which indirectly affects the refining business. Shale oil is produced through a highly intensive process of hydraulic fracturing known as “fracking," which separates the oil from the shale rocks. This is mostly taking place in the US and will affect heavy oil producers. However, we expect the demand for energy to continue increasing, despite the economic slowdown. Oil prices are still above $100 a barrel. Shale oil will boom, but will also soon peak, before probably being abandoned altogether. Fracking requires a lot of water and the treatment of this water is also an issue. Nevertheless, shale gas does provide a cheap source for the petrochemical industry. Accordingly, it will affect the petrochemicals industry, which uses naphtha—a refined product—as feedstock. This can adversely affect the refining industry if the US allows producers to export shale gas.

The UAE government declared 2013 the Year of Emiratization. What is Takreer doing to explore employment opportunities for the national workforce?

We're in line with this strategy and support it 100%. Our main need is for engineers and technicians. In engineering, we depend on ADNOC Petroleum Institute (PI) and local universities, and it's an area where we always experience a shortage. We are also working to attract those with secondary education and develop them into technicians, mechanics, electricians, and operators. We have a genuine need for such workers in this industry. ADNOC's target of achieving 75% Emiratization by 2017 is challenging, but we have confidence to succeed. Currently, we have realized a 35% ratio.

How challenging is it to recruit talented international staff, considering the high level of competition in this industry throughout the region?

It is a challenge, which was proven when we started the recruitment process for our new refinery. There are large-scale expansion projects taking place simultaneously in Saudi Arabia, Qatar, and Oman. We are doing our best to attract high-caliber employees. And the UAE, being an attractive and safe destination for many, is supporting our recruitment of foreign manpower. We also realize the importance of offering competitive employment packages.