Abu Dhabi’s investment arm IPIC and ConocoPhillips have signed deals for a new 500,000 barrels per day oil refinery in the UAE and to cooperate on energy projects, they said.
The cost of the export-orientated refinery in Fujairah was not disclosed, but neighbouring Saudi Arabia plans to build two 400,000 bpd refineries at a cost of $6 billion each.
After completion of a feasibility study, US oil company ConocoPhillips and International Petroleum Investment Co (IPIC) would form a joint venture to own and operate the refinery. It would be 51 per cent owned by IPIC and 49 per cent by Conoco, a statement said.
IPIC is owned by the government of Abu Dhabi. The UAE had said it planned to build a new refinery in Fujairah but previously put the capacity at 300,000 bpd.
The two firms also signed a memorandum of understanding to identify new upstream and downstream opportunities for joint investment. A statement said new upstream business would focus on the Middle East region.
“These agreements enable ConocoPhillips and IPIC to examine ways to jointly expand our respective global refining businesses in fast-growing markets as well as jointly develop new upstream business opportunities,” Conoco’s Paul Warwick, president for Middle East and Africa, said.
IPIC has said it wants to boost its presence in Asia and has raised its stake in South Korean refiner Hyundai Oilbank, which plans a $2 billion expansion of one of its plants.
Asia’s appetite for oil is making its refineries an attractive destination for US oil majors and analysts have said ConocoPhillips may beef up its refining capacity in Asia, where it now holds only a stake in a Malaysian refinery.
The firm, which has made expanding its refining operations a top priority, is quickly building up refining assets overseas with a deal in May with Saudi Aramco for a new 400,000 bpd refinery in Yanbu on the Red Sea coast.
IPIC said it hoped to broaden its portfolio by leveraging its downstream investments to diversify into the upstream.
“We can see exciting opportunities to grow in the refining and marketing business in many parts of the world,” said Khadem al Qubaisi, head of IPIC’s investment division. “We also see possibilities to grow regionally in the upstream business in both gas and oil developments...”
IPIC has so far been investing in international oil-related projects for the Abu Dhabi government and the market value of its investment portfolio stands at more than $7 billion.
Other Gulf producers boosted refining capacity to help tackle a global refining crunch that has helped push oil prices to record highs and capitalise on robust refining margins.
The UAE has two refineries in Abu Dhabi with total capacity of some 500,000 bpd and a 120,000 bpd refinery in Dubai.
