Mega gas projects under way in the UAE will nearly quadruple sulphur production within five years and turn the Gulf country into one of the top producers of the substance, an Abu Dhabi official said yesterday.

Sulphur output by the government-controlled Abu Dhabi National Oil Company (Adnoc) is currently estimated at around 1.7 million tonnes and most of it is exported to North Africa and southeast Asia, said Dagher Al Murar, Sulphur Sales Manager, Adnoc's Marketing and Refinery Directorate.

"Due to the ambitious expansion plans by Adnoc and its group of companies, especially the sour gas field developments, Adnoc is set to be among the largest sulphur producers worldwide by 2013, nearly four times the current production of around 1.7 million tonnes per year," Al Murar told Adnoc's quarterly bulletin, Adnoc News, released yesterday.

He said around 800,000 tonnes of the emirate's sulphur output are exported to end-users, mainly Morocco, Tunisia, Senegal and Jordan.

Other quantities are destined to various Asian and African markets such as India, South Africa, South East Asia, and China, which is considered the main driver in sulphur demand, with an import of around 10 million tonnes per year.

"Adnoc focuses on diversification of its clients and markets base, in anticipation and preparation to become one of the world's largest sulphur producers by 2013 with a projected capacity of more than six million tonnes per year," he said.

According to Al Murar, current sulphur prices have jumped more than 10 fold over the average price of the first-quarter of 2007, reaching a record $600 per metric tonne, the highest level through history. Nevertheless Al Murar expected another record high price level during the year 2008.

He attributed the unprecedented price rise to a sharp increase of fertiliser demand worldwide, led by the surge in bio-fuels production and the efforts to avoid shortfall in food and grain supply worldwide, which in turn contributed to a sharp growth in sulphur demand and lack of sufficient supply.

On Adnoc's future plans in sulphur marketing, Al Murar added that there is a programme to expand the emirate's sulphur market share in the current markets and enter into important markets such as Brazil, Madagascar and Australia.

"It is very important for Adnoc to explore the possibility of investing in the sulphur consuming industries such as fertilisers and leaching, which will guarantee an added value to Adnoc sulphur industry," he said.

"Our strong marketing team and strategic geographical location as well as advanced production and loading facilities make us a favourite choice for sulphur buyers. It also sets us among the top sulphur producers and exporters."

Abu Dhabi, one of the world's largest oil producers, has been locked in a massive drive to expand its gas production to face a rapid growth in domestic consumption because of a steady expansion in power and desalination output.

In recent statements, Minister of Energy Mohammed bin Dhaen Al Hamili said gas development projects would boost the UAE total gas output by nearly 33 per cent to around 6.5 billion cubic feet per day by the end of 2008.

The emirate and its foreign partners are expected to sharply raise investment over the coming years because of soaring construction costs. According to an official Arab report, energy investment needs in the UAE and all other Gulf and Arab oil producers have more than doubled over the past five years and are set to surge because of surging construction costs worldwide.

The report by the Saudi-based Arab Petroleum Investment Corporation (Apicorp), an affiliate of the 10-nation OAPEC, showed the total energy investment requirements in the Arab world, mostly in Saudi Arabia, UAE and Qatar, peaked at $490 billion (Dh1.7 trillion) during 2008-2012 compared with $395bn in the previous five-year review period and $260bn during 2006-2010.

They were put at $210bn during 2005-2009 and $180bn during 2004-2008.

Since a large part of the Arab energy projects are based in the UAE, estimated at nearly $47bn, the country is expected to be one of the main victims of the higher costs, according to sources.

Apicorp figures showed the costs of gas and oil projects in the UAE were estimated at only $15bn during 2005-2009. They swelled to $20bn during 2006-2010, to $32bn during 2007-2011 and $47bn for 2008-2012.



The numbers

1.7m: Tonnes is the current output of sulphur by Adnoc, and most of it is exported to countries in North Africa and southeast Asia

10m: Tonnes of sulphur is imported by China, making it the main driver of demand

10: Fold increase in sulphur prices over the average price of the first-quarter of 2007

$47bn: Is the cost of gas and oil projects in the UAE, which was only $15bn in 2005-2009