CAPITAL: Abu Dhabi

MONETARY UNIT: Dirham

REFINING CAPACITY: 286,800 b/cd

OIL PRODUCTION: 2.32 million b/d

OIL RESERVES: 97.8 billion bbl

GAS RESERVES: 204.9 tcf

Abu Dhabi had onshore gas reserves at the center of its strategies for production, processing, and domestic energy use in 1997.

In addition to helping meet the fuel requirements of rapid industrialization, gas produced from onshore fields was to feed a growing petrochemical industry in Abu Dhabi and increasingly be injected into condensate and oil reservoirs to boost production.

Abu Dhabi National Oil Co. (Adnoc) expected condensate production capacity onshore to more than double to 280,000 b/d by 2000. It made condensate processing a priority in its planned expansion and upgrade of the 135,000 b/d refinery at Ruwais.

Nonassociated gas accounted for a growing share of Abu Dhabi`s total gas production. Associated production, limited by the Organization of Petroleum Exporting Countries quota of 2.16 million b/d for oil produced in all of the emirates, had been steady at about 1.5 bscfd since 1991.

For the first time, nonassociated production exceeded associated gas flow during 1996. Flaring was less than 5% of total output.

About 45% of Abu Dhabi`s gas reserves volume, which makes up most of the 205 tcf unofficially estimated for the U.A.E., is associated with oil. Gas cap volumes account for 24% of total reserves, free gas 31%. Adnoc`s gas development plans focus on free gas reserves.

In 1996, when Abu Dhabi`s average gas consumption reached 3 billion scfd, exports accounted for 43% of total gas use, industry 4%, water desalination and electricity generation 18%, injection 21%, and oil and gas field uses-including flaring, fuel, and shrinkage-14%.

Abu Dhabi Co. for Onshore Operations (ADCO), in which Adnoc is majority shareholder, in 1997 recycled gas produced from two condensate reservoirs to maintain pressure. Recycling was to begin in two more condensate reservoirs by 1999.

Recycling will continue as long as value of the resulting condensate exceeds that of the recycled gas. Adnoc doesn`t include recycled volumes in its gas production figures.

ADCO began gas injection for oil recovery in Bab South and Bu Hasa North fields and was studying other injection projects. Officials expected injection into oil and condensate reservoirs to become Abu Dhabi`s most significant gas consumption sector.

Economic growth and urbanization will keep gas demand growth high for power generation and water desalination. And projects at Ruwais, about 250 km west of Abu Dhabi City, will raise industrial gas use to nearly 400% of 1997 levels by 2003. Planned and approved projects will add 600 MMscfd to total demand, and other projects were under study.

Abu Dhabi`s gas exports included 5 million metric tons/year of LNG from Das Island and liquid petroleum gas from the liquefaction facility and a fractionation plant at Ruwais. Condensate produced offshore was blended with crude oil and exported.

Processing activity

As of second half 1997, condensateproduced onshore was exported from Ruwais. New refinery units use it as feedstock for unleaded gasoline and other products. Condensate produced offshore will continue to be exported with crude.

The refinery expansion included installation of condensate processing capacity totaling 280,000 b/d and the eventual doubling of crude capacity.

The first phase of the project was to add two 140,000 b/d condensate processing trains with attendant kerosine sweetening units and naphtha stabilizers. The trains were to enter service 6 months apart during 1999. Following them into service as part of the first phase will be naphtha and gas oil hydrotreaters, a 27,500 b/d catalytic reformer with provision for future paraxylene production, and a 25,000 b/d isomerization unit.

The second phase of the refinery expansion will include a 135,000 b/d crude train, a hydrocracker, gas oil hydrotreaters, residue upgrading and associated downstream units to handle about 36,000 b/d of vacuum resid, and offsites and utility facilities.

Addition of a complex capable of producing 800,000 tons/year of paraxylene was possible to help Adnoc take advantage of the high naphtha content of Abu Dhabi`s condensate. Feed would be reformate not needed for production of unleaded gasoline. Streams remaining after xylene removal could reenter the gasoline pool.

With growing volumes of light hydrocarbons becoming available at Ruwais, Adnoc planned to expand its activities into olefins production.

In addition to the refinery and Gasco fractionation plant, facilities at Ruwais include a 4,200 ton/day sulfur granulation and handling terminal and a Ruwais Fertilizer Industries (Fertil) plant, which exports 600,000 tons/year of urea and surplus ammonia. Fertil is a member of the Adnoc group of companies.

Adnoc planned to use ethane in tail gas at the Gasco plant as feedstock for production of ethylene and polyethylene. Gasco uses the gas as fuel.

In 1996, Adnoc entered a joint venture with Borealis AS, Copenhagen, to build a complex at Ruwais capable of producing 450,000 tons/year of high density and linear low density polyethylene. Start-up was scheduled late in 2000.

Abu Dhabi`s Supreme Petroleum Council approved expansion of the ethylene cracker to 600,000 tons/year from 450,000 tons/year, expandable to 750,000-900,000 tons/year. Adnoc was studying propane as a supplementary feedstock.

A new ethylene dichloride (EDC) complex at Ruwais will use the extra 150,000 tons/year of ethylene produced by the joint venture and salt from a recently discovered dome at Jebel Al Dhanna to produce 520,000 tons/year of EDC and 430,000 tons/year of sodium hydroxide. Commissioning of the EDC complex was planned for 2001.

The EDC plant will provide chlorine and salt for local consumption and hydrogen for the Ruwais refinery.

Also at Ruwais, Fertil was considering doubling its capacity to produce urea.

Elsewhere in the U.A.E., Dubai Gas Co. during second quarter 1997 began operation of a $250 million, 500,000 metric ton/year methyl tertiary butyl ether (MTBE) plant at Jebel Ali, Dubai, making the U.A.E. the second Persian Gulf state, after Saudi Arabia, to have an MTBE industry. Dubai receives gas supplies from Sharjah but planned to buy gas from Abu Dhabi to feed the new MTBE plant.

In Sharjah, meanwhile, Sharjah Oil Refining Co. delayed commissioning of the 24,000 b/d refinery it purchased and moved from Canada from October 1997 to January 1998. Procurement and utility problems forced the delay. It planned to ship a second refinery from Canada in 1998, expand capacity to 26,000 b/d, and commission it in October 1998. A third refinery was scheduled for start-up in 1999.