Abu Dhabi National Oil Co. has dropped its 200,000 b/d planned expansion and revamp of Ruwais Refinery West, but has compensated for the capacity through internal efficiencies, sources familiar with the matter told S&P Global Platts this week.
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"The planned expansion would have delivered an extra 200,000 b/d. However over the last year, through efficiencies and other work, [ADNOC] have been able to deliver it in another way using current refining units... So it's more or less compensated for," a source close to ADNOC said.
"[ADNOC] have debottlenecked and delivered 200,000 b/d of the extra capacity that would have been planned, this is not extra production but extra capacity," he added.
Last week, ADNOC confirmed it had dropped its plan for a new 400,000 b/d refinery in Ruwais' existing refining complex, citing economic feasibility.
The 200,000 b/d expansion of Ruwais West was originally slated for 2024, but market participants noted that to date no engineering, procurement and construction contracts have been awarded.
"ADNOC have not signed contracts or awarded EPCs yet," another source familiar with the matter said.
ADNOC declined to comment.
According to Facts Global Energy Managing Director Iman Nasseri, ADNOC has been changing its mindset from that of a traditional national oil company to an international oil company in recent years.
"ADNOC wants to be a world-class IOC and so it wouldn't sanction a project unless the commercials and economics are justified and that's why they pulled the plug on the refinery," Nasseri said.
"The [200,000 b/d] expansion was meant to capitalize on 2024-29, which will be the last golden age of high refining margins, but the longer they wait the more difficult it will be to justify economically the investment," he added.
ADNOC originally planned to build a 600,000 b/d greenfield refinery in Ruwais and awarded a pre-feed contract to UK-based engineering firm Wood Group in February 2019. However, this changed to a 400,000 b/d petrochemicals-focused refinery and a 200,000 b/d expansion and revamp of Ruwais refining complex after Italy's Eni and Austria's OMV acquired equity stakes in ADNOC.