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Annual Review 2017

enoc.com
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    Tayyeb Al Mulla

    Managing Director, Supply,
    Trading and Processing

    30%
    Increase in global energy demand over the next 20 years or so, regardless of electric cars. icon
    Oil is the lowest-cost fuel option. Although there are alternatives, they are still expensive to produce. icon

  • Through its trading, refining and petrochemical business, ENOC is sufficiently diversified to adapt to the rapidly changing market environment, where advances in vehicular technology will have a profound impact. Even with the predicted market shift to electric and hybrid vehicles, with a consequent decline in fuel offtake, demand for other refined products – whether for industrial or domestic use – will continue to be strong.

  • BP Energy Outlook projects a 30 percent increase in global energy demand over the next 20 years or so, regardless of electric cars. This view is supported by the International Energy Agency (IEA), which forecasts that oil demand will fall only modestly alongside the expected rise in electric vehicles over the next two decades, with consumption in petrochemicals and other transportation sectors still growing.

  • The IEA estimates that there will be 50 million electric vehicles on the road by 2025 and 300 million by 2040, from close to 2 million now. This is expected to cut only 2.5 million barrels per day – about 2 percent – off global oil demand by that time.

    Oil is the lowest-cost fuel option. Although there are alternatives, they are still expensive to produce, do not have the range, and haulage is not yet feasible. Aviation and jet fuel are still hugely in demand. ENOC’s model has been thoughtfully structured to take these factors into account, leaving us in a strong position to continue operating in the industry – and to meet this likely increased demand.

STP manages two plants to international standards, providing various refined products that are distributed through the ENOC and EPPCO retail networks, at airports in Dubai and across the region, and to domestic industries. The segment has been highly successful in identifying and tapping the right marketing outlets within the UAE and international markets.

Recent developments

Based in the Jebel Ali Free Zone, ENOC’s refinery was Dubai’s first when it was established in 1999. It has capacity to process 140,000 barrels per stream day (bpsd) of condensate, which yields refined products such as naphtha, reformate, jet fuel, diesel oil, fuel oil, and LPG for the local and export markets.

A refinery expansion project, initiated in 2016, is expected to be completed by 2019 at a cost in excess of US $1 billion. It will add a new condensate processing train, expanding daily capacity by 52.5 percent to 213,500 barrels. The project also involves additional downstream processing units such as naphtha hydrotreater, isomerisation unit, kerosene and diesel hydrotreaters, utilities, warehouse and storage tanks. The higher production capacity will help meet expanding domestic and global demand for the plant’s refined products. In response to the UAE’s drive towards clean energy, the revamped refinery will comply with stringent Euro5 standards.

During 2017, the final contract of three packages was awarded, including construction of various pipelines between the refinery’s processing units, storage tanks and berth facilities. The contract also provides for a non-destructive road crossing to ensure there is no disruption of road traffic or utilities within the Jebel Ali Free Zone.

The current expansion follows an upgrade in 2010 for the production of reformate, a high-octane blending component for gasoline, and low sulphur naphtha, through the installation of a reformer and a hydrotreater. The plant incorporates state-of-the art effluent treatment facilities, minimising environmental impacts.

The Group established its gas processing plant in 1977 to utilise natural gas resources for the benefit of Dubai and its people. Commercial production of LPG began in 1980, followed by methyl tertiary butyl ether (MTBE), an additive for unleaded gasoline, in 1995. With annual capacity of 675,000 KMT, the MTBE plant is part of Dubai Natural Gas Company Limited (Dugas).

Supply and Trading

Supply and Trading, the Group’s trading nerve centre, procures cost-effective and uninterrupted supply of feedstock for the refinery and the MTBE plant, while identifying and establishing new international business opportunities. One of the important functions of Supply and Trading is to meet the supply requirements of ENOC’s other business segments, either from refinery production or through imports. Supply and Trading also finds export outlets for naphtha and other surplus refinery production.

Strategic partnerships with governments, international oil companies, and traders enable ENOC to identify and build on a range of global business opportunities. ENOC is now trading in key international oil markets such as Asia, the Middle East, Europe, and North and South America. Participating in the global commodities market through a multi-trading, multi-cultural, multi-location (Dubai, London and Singapore) set-up has helped ENOC to expand its trading hours and supported the Group’s trading business.

In 1999, ENOC became the first Middle Eastern oil company to establish an international presence, starting its trading operations in Singapore. ENOC Singapore leverages its location in a global trading hub and engages in trading oil products and procuring refinery feedstock from international markets. Price risk management is another key function performed by ENOC Singapore – for Supply and Trading, as well as other ENOC segments.