Adnoc plans to hike production
Adnoc plans to raise runs by more than 30 per cent at its condensate splitter by 2007 to churn out more clean products for the Asia market, industry sources say.
They said Adnoc would raise production at its condensate splitter to at least 240,000 barrels per day (bpd) by late 2007 from 180,000 bpd.
The splitter has a nameplate capacity of 280,000 bpd but runs at lower rates due to a shortage of feedstock.
Sources have said Adnoc had laid out extensive plans to raise its drilling programme to boost condensate production to get the splitter running at full capacity, possibly by 2008.
"Naphtha and gasoline production will be much higher. There will be more jet fuel as well," a source at an industry conference in Singapore said.
Traders said Adnoc, Asia's third-biggest supplier of naphtha after Saudi Aramco and Kuwait Petroleum Corp, exported about 6.5 million tonnes of naphtha this year and should export a similar amount in 2005.
The bulk of Adnoc's naphtha is delivered to customers in Japan, South Korea and Taiwan, with about 80 percent of its supply tied down under term contracts, the sources said.
Naphtha is used as the main feedstock in Asia for the production of ethylene and propylene - the basic building block for a whole range of plastic products.
Meanwhile, Adnoc will close two condensate splitters for maintenance this year, adding to an already heavy regional first quarter shutdowns schedule, trade sources have said.
The closures will tighten the Asian naphtha market, which relies on Middle East refiners for most of its imports, especially as Kuwait will shut parts of its largest refinery, the 450,000 barrel per day (bpd) Mina Al-Ahmadi, at the same time.
"There doesn't seem to be much concern about January because end-users are mostly covered. But February reductions could hurt," said a naphtha trader with an oil major.
Adnoc plans to close its Ruwais-based splitters one after the other, with the first splitter to be shut for 30 days from mid-January and the second from mid-February, traders said.
Each splitter has a capacity of 140,000 bpd but they usually run at about 60 per cent capacity because of a lack of condensate, industry sources said.
Although each splitter is expected to run at higher rates when the other unit is shut, sources still anticipated a reduction in overall output.
The units produce roughly 60 per cent naphtha and 20 per cent jet fuel, with the rest made up of gas oil and fuel oil.
Some said that 200,000 to 300,000 tonnes of naphtha supply would be wiped out of the market as a result of the turnarounds.
One trader estimated that total product exports from the splitter could be cut by almost half a million tonnes over the period.
Adnoc has already told some customers that they will not be able to maximise cargoes by the usual 10 per cent operational tolerance and is expected to limit first quarter naphtha exports to contract volumes only, foregoing any spot sales.
"They have no room to top up 10 per cent, so we are planning to lift just 75,000 tonnes, instead of our usual 80,000 tonnes," said one term lifter in North Asia.
Adnoc exported the bulk of its naphtha to customers in Japan, South Korea and Taiwan.
A trader with a Middle East firm said jet fuel exports would also be reduced due to the shutdowns.
Heavy maintenance work in the Middle East is expected to keep the naphtha market well-supported in the first quarter.
End-users and traders in Asia said they were also expecting reduced volumes from Kuwait, where the country's largest refinery is due for a two-part turnaround.
"The term volume from Kuwait in the first quarter may not change, but they will probably halt spot cargoes," said a market source.
Kuwait exports roughly 7.5 million tonnes of naphtha a year to Asia under term and spot contracts.
Meanwhile, the Adnoc Marketing & Refining Directorate is responsible for selling to the international markets Adnoc’s equity share of crude and condensate production, natural gas liquids and sulphur, together with the refined oil products processed by Takreer.
It is also sells oil products to local distribution companies for consumption in the domestic market.
The Marketing and Refining Directorate also coordinates the activities of the Abu Dhabi Oil Refining Co. (Takreer), Adnoc Distribution, the Abu Dhabi National Tanker Company (Adnatco) and the National Gas Shipping Company (NGSCO) all of which are wholly owned subsidiaries of Adnoc.

