ECONOMIC DEVELOPMENT - UAE Interact

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152UNITED ARAB EMIRATES YEARBOOK 2006ECONOMIC DEVELOPMENT153of gas recovered from the ABK Khuff reservoir to be increased from 320 mmscf/dto 540 mmscf/d, thus providing a welcome boost to offshore gas production.Looking to the future, plans are now being laid for a major gas pipeline fromUmm Shaif, offshore, to Habshan, onshore, to link Abu Dhabi’s gas productioninto a single network. The project is being undertaken by GASCO.DubaiDubai’s gas demand is growing by 10 to 15 per cent per year. Consumption in 2004averaged 850 mmscf/d (not counting gas used for re-injection of oil reservoirs). Peaksummer demand can reach 1.6 billion cf/d. Dubai’s proven natural gas reserveswere estimated at 4.1 tcf as at 1 January 2005. The only domestic source of naturalgas for end-users is the onshore Margham field, since all the associated gasproduced at the offshore oilfields is now re-injected. Margham’s gas production hasbeen declining for some years. After averaging 330 mmscf/d in 2000, down from350 mmscf/d in 1999 and 380 mmscf/d in 1998, production was reported to berunning at less than 200 mmscf/d in early 2004, plus 15,000 b/d of condensate.Dubai depends heavily upon imported gas to meet its energy needs. Its powerstations, desalination plants and factories could not operate without natural gasas an energy source, and plans are under way to ensure that future needs are metby ambitious and innovative projects, such as the Dolphin Energy gas pipelinenetwork linking Qatar, Abu Dhabi, Dubai, Fujairah and Oman. At present, Dubai isimporting 300 mmscf/d from Sharjah and approximately 900 mmscf/d from AbuDhabi. In early May 2005, Dolphin Energy Limited announced the signature of agas sales agreement with the Dubai Supply Authority (DUSUP), to deliver futuresupplies of Dolphin gas from Qatar to DUSUP in Jebel Ali, from 2007. Theagreement with DUSUP provides for the supply of up to 700 mmscf/d of Dolphinnatural gas from Qatar for a period of 25 years. This agreement highlights DolphinEnergy’s commitment to meet the future requirements of the UAE energy sector.SharjahFollowing the national trend, gas consumption is increasing more rapidly than oilconsumption in Sharjah. The emirate produced 600–650 mmscf/d of natural gasin 2004, down from around 1 billion cf/d in 1997/98. In order to help meet thelocal demand for gas, a second processing plant has been under construction atSaja’a. This will mainly draw feedstock from the Mubarak field where Crescent isinstalling a new riser platform. This Northern Emirates Gas Supply Project, initiatedin 2004 by Crescent Petroleum with the approval of the Sharjah Government,was opened by Saja’a Gas Private Ltd, (SajGas) in September 2005. The US$90million plant is supporting the utilities industry for power generation in Sharjahand the Northern Emirates.Sharjah’s natural gas reserves are estimated at 10,700 billion cubic feet. Ifdevelopment goes ahead, the new Zora gas field should provide a small boostto production. As noted above, Sharjah has been exporting natural gas to Dubaisince 1986 and presently supplies its neighbour with around 300 mmscf/d.Sharjah LPG Company (SHALCO) operates a gas processing plant in Saja’a whereit handles output of the BP-operated onshore Saja’a and Moveyeid fields. It wasoriginally designed to process up to 440 mmscf/d of natural gas for the productionof 230,000 t/y of propane, 170,000 t/y of butane and 220,000 t/y of condensate.The plant’s capacity was increased to 700–800 mmscf/d in 1994 to enable it tohandle gas from the Kahaif field as well. The propane and butane produced bySHALCO are marketed by Itochu and the condensate by BP. Condensate iscarried by a 32-kilometre, 12-inch pipeline to Al Hamriyah on the coast, where BPhas its own jetty capable of accommodating tankers of up to 83,000 deadweight tonnage (dwt). The terminal includes two storage tanks with a combinedcapacity of 110,000 cubic metres. The bulk of the condensate is shipped toJapan, although small quantities are exported to Western Europe and NorthAmerica. The condensate has low sulphur content (0.01 per cent) and a naphthayield of almost 80 per cent. BP also exports much of the natural gas it produces,although most is supplied to industrial and household consumers within theemirate. The SHALCO plant deserves special recognition for the fact that itrecently broke a world record for LPG recovery, achieving 99.75 per cent recoveryof propane and 100 per cent recovery of butane and condensate.As noted above a second processing plant was opened in late 2005. This newSajGas project has a capacity of 600 mmscf/d via two trains that producemarketable gas, and 350 tons/day of sulphur. Gas from the plant is being fedinto a transmission network being built by Union Gas Transmission Company(UGTC) in order to supply gas to power stations, industrial plants and other endusers in Sharjah and the Northern Emirates. This is in addition to the existingSEWA network that delivers gas to 100,000 households and 500 industrial premisesin and around Sharjah City.A new compressed natural gas (CNG) plant has been established in the HamriyahFree Zone by a company called Compressed Gas Technology (CGT). The plantis producing CNG both for the local market and for export. CGT also designs andassembles CNG filling stations and its first local station opened at Dasman inJuly 2005.A major new private-sector regional gas company, Dana Gas, was launchedfrom Sharjah in the summer of 2005. The core founders of the new companyare Crescent Petroleum and the shareholders of Saja’a Gas Ltd and United GasTransmissions Company, in particular the Sharjah government, the Bank ofSharjah, and prominent shareholders from across the GCC. These core founderswere joined by institutional investors and individuals from all over the Gulf. Thenew company is capitalised at Dh6 billion, with 65 per cent retained by the
154UNITED ARAB EMIRATES YEARBOOK 2006ECONOMIC DEVELOPMENT155founders, and 35 per cent offered to the public through an IPO. Dana Gas is the firstprivate-sector gas resource company in the region to be publicly listed, and plans tofocus on the growing natural gas business in the Gulf and beyond. It will start withsubstantial assets in the gas chain, including established business interests in gassupply, transportation, processing, and marketing, and with revenues andprofitability expected from the company’s first year of operations. There areplans to expand the business into related projects throughout the Gulf region,including into the upstream exploration and production of natural gas, anddownstream into gas-related industries and petrochemicals.Ra’s al-KhaimahRa’s al-Khaimah is reported to have natural gas reserves of 1.2 trillion cubic feet.Following a number of years in which the Saleh field produced limited quantitiesof both oil and gas, the field switched to production of just condensate (currentlyproducing 700 b/d). The LPG plant at Khor Khwair in Ra’s al-Khaimah now getsits feedstock from the offshore Bukha field in Oman. An Australian company, NovusPetroleum, began exploration work in the second half of 2003, completing a150-kilometre 2D seismic survey. Novus is hoping that it will discover wet gason its 600-square-kilometre onshore tract.The Ra’s al-Khaimah government signed an agreement in October 2004 withDEL for supply of 40 mmscf/d of natural gas. Initially supplies are reachingRa’s al-Khaimah from Oman, but this will switch to Qatari gas when that comeson-stream.FujairahFujairah has no gas production facilities of its own, but its requirements for theQidfa desalination plant are met by the Dolphin project that is supplying gas viaDEL pipelines.AjmanA petroleum production sharing agreement was signed between Sharjah andAjman in early July 2002 to jointly develop the Zora field, a gas reservoir locatedaround 40 kilometres off the two coasts. Chinese-owned Crescent Petroleum andAtlantis, which hold the concessions from the two respective governments, werealso signatories to the agreement. Production is to be shared equally between theparties concerned but by mid-2005 development had not commenced.Umm al-QaiwainSinochem, owners of Atlantis Holdings, who hold the offshore concession forUmm al-Qaiwain, are continuing to evaluate options for the development of gasreserves identified in the UAQ3 well. Recoverable reserves are estimated at upto 500 billion cubic feet of gas and 5 million barrels of condensates.PETROCHEMICALS AND FERTILISERSAbu DhabiAbu Dhabi has several major petrochemical and fertiliser industrial complexes,the Ruwais Fertiliser Industries Company (Fertil), the Abu Dhabi Polymers Company(Borouge), and Abu Dhabi Fertiliser Industries Company (Adfert). Fertil wasestablished to utilise lean gas supplied from onshore fields at Bab, Asab andThamama C to produce fertilisers and market them locally and internationally.It brought its existing nitrogenous fertiliser plant in Ruwais on-stream in April 1984.This consists of a 1050 t/d ammonia plant and a 1500 t/d urea plant, but they haveoperated at over 130 per cent of capacity in recent years (1310 t/d of ammonia and1850 t/d of urea). The emirate is planning to grow this sector, both as a result ofexisting facilities expansion and through establishment of new projects that willproduce derivatives such as melamine, polyethylene (PE), polypropylene, polyvinylchloride (PVC), vinyl chloride monomer (VCM), linear alpha olefins and aromatics.Adfert commenced production from a plant situated in Mussafah in June 1998.This plant can produce up to 200,000 t/y of water-soluble and granular compoundfertilisers. It also produces liquid and suspension fertilisers.Borouge’s petrochemical complex in Ruwais cost an estimated US$1.2 billionto develop and includes a 600,000 t/y ethane cracker that supplies ethylenefeedstock to two 225,000 t/y polyethylene units. Borouge produces up to 580,000tonnes of Borstar bimodal high-, medium-, and linear low-density polyethyleneper year. Combining good processability with excellent mechanical properties,Borouge Borstar products are stronger, lighter, environmentally friendly and moremalleable than conventional polyethylene, resulting in material savings of up to30 per cent.Notwithstanding its excellent results to date, Borouge has significant expansionplans. It is planning to develop a larger petrochemical complex with annualproduction capacities of 1.4 million tons of ethylene, 540,000 tons of polyethyleneand 800,000 tons of polypropylene.In addition to promoting its own polyethylene products, Borouge also overseesthe distribution and marketing of Borealis’s entire range of polyolefins in theMiddle East and Asia Pacific. These products include polyethylene for extrusioncoating, moulding, and wire and cable, as well as polypropylene for film, moulding,hot water pipes and engineering applications.Borouge was originally established by ADNOC (which held 60 per cent) andBorealis (in which the Abu Dhabi government also held a stake). Changes to thisshareholding structure were initiated in 2005 when the International PetroleumInvestment Company (IPIC), wholly owned by the Abu Dhabi government, signeda purchase agreement to take complete control of Borealis by purchasing theremaining 40 per cent stake held by Statoil. IPIC is mandated to participate as
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