Samsung Engineering Co., Ltd announced today that it has received a letter of award (LOA) to build a Crude Flexibility Project (CFP) on behalf of ADNOC Refining in the United Arab Emirates. At a value of $ 3.1 billion, it is the ninth award in total Samsung Engineering received from ADNOC (Abu Dhabi National Oil Company), the national oil company of UAE and the parent company of ADNOC Refining.
Samsung Engineering secured the contract in partnership with CB & I Nederland B.V. as joint venture partner. Samsung’s contract amount is $ 2.6 billion.
This project will be built at the Ruwais Industrial Complex (the largest industrial complex in the UAE). It will construct a new Atmospheric Residue De-Sulfurization (ARDS) facility, with an annual capacity of 177,000 barrels per day. The estimated completion schedule will see project delivery end of 2022.
Samsung Engineering has previously delivered six projects in the Ruwais complex, two of which are directly linked to CFP. Therefore, not only is it possible to fully utilize the existing experienced manpower, equipment, facilities and partner network, but also build on our strong relationship with ADNOC Refining.
Sungan Choi, President & CEO of Samsung Engineering stated: "We were able to win this project based on our track record of delivering safely and on schedule.” Further was stated: “We will do everything in our power to successfully execute CFP by utilizing our global experience in the refining sector.”
The state-run energy company awarded the engineering, procurement and construction contract for the CFP project to a joint venture between South Korea’s Samsung Engineering and Netherland’s CB&I. The company didn’t disclose the value of the contract.
The project entails adding an Atmospheric Residue De-Sulphurisation unit to enable the refinery to process the Upper Zakum, or other similar crudes, Adnoc said.
“The ARDS technology is extensively used in upgrading medium to heavy petroleum oils and residues to more valuable clean environmentally friendly transportation fuels and to partially convert the residues to produce low-sulfur fuel oil and hydrotreated feedstocks,” the company said.
Adnoc's refinery upgrade is in line with global trends to reduce costs and extract higher value from processing crudes, said Spencer Welch, director for oil markets and downstream at London-based IHS Markit.
"The purchase cost of crude is the biggest cost in running an oil refinery, [and] having greater flexibility in crude purchasing is very important because it strengthens the purchasing/trading position of the refinery and potentially significantly reduces costs," he said.
"Globally refiners are constantly assessing investment and improvements, to increase the ability to upgrade crude to lighter products, reduce costs and increase purchasing options."
The UAE, the Arabian Gulf's second-largest oil producer behind Saudi Arabia, in November announced a spending commitment of Dh400 billion over the next five years and plans to invest more than 40 per cent of the total to diversify and grow its downstream businesses as part of a strategy to triple petrochemical production by 2025.
It is also building the largest integrated refining and petrochemical site in the world, at Ruwais, aimed at converting 20 per cent of Adnoc’s crude to chemicals.
The company is also on track to expand crude capacity to 3.5 million barrels per day to support future demand, particularly in Asia.
"There are several advantages to the refinery being able to process a variety of crude grades," said Richard Mallinson, analyst at consultancy Energy Aspects. "Murban prices at a premium to heavier UAE grades such as Upper Zakum, so Adnoc will usually generate more revenue from exporting Murban. The refinery can also use the flexibility to process the feedstocks that offer the best economics at any given time.
Source : Samsung Magazine.