Ipic setting up three refineries

Abu Dhabi has stepped up an oil downstream investment drive, buoyed by a surge in petrodollar income and profits from such investments.

The emirate's downstream investment arm, the International Petroleum Investment Company (Ipic) is pushing ahead with the construction of a major grassroots refinery in Fujairah and two other in Morocco and Pakistan despite a sharp rise in the required capital because of high construction costs.

The company is expected to pump nearly $3 billion (Dh11bn) into a joint refining venture in Morocco, $5bn in the refining project in Pakistan and between $6-10bn in the Fujairah refinery, according oil industry sources.

The projects are part of Ipic's intensified investment drive in refining and petrochemicals despite a surge in the costs of such projects, now nearly double than five years ago, the sources said.

The company is also planning to invest in upstream oil projects although it has not specified such plans, which reflect a new policy of diversification of the investment portfolio, most of which are based in the West.

Although it has not announced the exact investments, Ipic has recently spoken of plans to nearly double its assets to more than $20bn over the next five years.

Last week, Ipic announced it would begin the construction of a 360km pipeline in August to transport 1.5 million bpd of crude oil from Abu Dhabi's giant Habshan oilfield to Fujairah and part of the supplies could be used to feed the refinery. The announcement indicated Ipic is pushing ahead with the refining project after a long delay because of hesitation by potential partner, Conoco Philips, due to soaring costs.

The refinery could have a capacity of 500,000 bpd and cost between $6-10bn.

"I think $10bn or even more is the likely figure, depending of course on the actual output capacity," said an industry source.

Early this month, Ipic approved plans to build a 250,000 bpd refinery in Pakistan at a cost of about $5bn and another one in Morocco.

The company provided no figures on the costs of the project in Morocco but executives in that country put them at $6bn. A new company is to be set up to manage the project at the port of Jorf Lasfar in participation with foreign partners.

Wam, which reported the project, did not elaborate on the possible partners, but Morocco said last year it was in talks with investors from the UAE, Kuwait and Spain for the joint venture refinery.

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