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OXFORD INSTlTUTE
E N E R G Y STUDIES
= FOR =
Petroleum Investment in the Arabian Gulf
Goran Bergendahl
Oxford Institute for Energy Studies
F5
1985
The contents of this paper are for the purposes of study and discussion and do not represent the views of the Oxford Institute for Energy Studies or any of its members.
Copyright 0 1984 Oxford I n s t i t u t e for Energy Studies
ACKNOWLEDGEMENTS
Many persons have g i v e n va luab le comments to the author concerning the content of this report. Spec ia l thanks go to John Mugno, Citibank; Lakdasa W i j e t i l l eke , Michael Pearson and Isaac Sam, World Bank; Jens Mb1 lenbach, Leo Drol las , Marshal 1 Hal 1 and J o h n Borkowski, B r i t i s h Petroleum.
1 . PETROLEUM INVESTMENTS I N THE MIDDLE EAST
2. INVESTMENTS I N KUWAIT
3 . INVESTMENTS I N QATAR
4. INVESTMENTS I N SAUDI ARABIA
5. INVESTMENTS I N THE UNITED ARAB EMIRATES
6 . CONCLUSIONS
MOTES
REFERENCES
1
4
10
16
26
34
45
46
FIGURES
FIGURE 1 CAPITAL EXPENDITURES FOR THE MIDDLE EAST PETROLEUM INDUSTRY
2 FLOW OF GAS PRODUCTS I N QATAR
3
1 2
TABLES
TABLE 1 CRUDE OIL PRODUCTION AND PETROLEUM REFINING IN KUWAIT
2 INVESTMENTS IN KUWAIT
3 CRUDE OIL PRODUCTION AND PETROLEUM REFINING I N QATAR
4 INVESTMENTS IN QATAR
5 CRUDE OIL PRODUCTION AMD PETROLEUM REFINING I N SAUDI ARABIA
6 INVESTMENTS IN SAUDI ARABIA
7 CRUDE OIL PRODUCTION AND PETROLEDM REFINING IN TRE UNITED ARAB EMIRATES
8 INVESTMENTS I N TIIE UNITED ARAB EMIRATES
37
38
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40
41
42
43
44
I n 1974 t he t h i r t e e n OPEC coun t r i e s suddenly r ece ived
record o i l revenues of $114 b i l l i o n . The d i s p o s a l of t h a t income
was as fo l lows : 35% was used t o f inance imports of goods - mainly
consumer goods and the remainder - the cur ren t account s u r p l u s - was p l a c e d a b r o a d , m a i n l y i n t h e fo rm of bank d e p o s i t s ( s ee
s t a t i s t i c s i n Bergendahl 1984).
When a second, even l a r g e r wave of o i l revenues ( $ 2 7 9
b i l l i o n ) r e a c h e d t h e t h i r t e e n c o u n t r i e s i n 1980, a l a r g e r
p r o p o r t i o n (some 64% o r $ 1 7 9 b i l l i o n ) was used d i r e c t l y f o r
impor t s . But t h i s t i m e a s u b s t a n t i a l p a r t of the r e m a i n d e r w a s
p l a c e d i n t o l o n g e r - t e r m a s s e t s , s u c h as s t o c k s , bonds and r e a l
e s t a t e .
Two years l a t e r o i l revenues f e l l s l i g h t l y t o a l e v e l
o f $ 2 0 0 m i l l i o n a n d t h e c u r r e n t a c c o u n t s u r p l u s a l m o s t
disappeared. What had happened? Did t h e OPEC coun t r i e s choose
t o d i r e c t t h e i r s u r p l u s e s i n t o d o m e s t i c consumpt ion o r into
domestic investments?
The answer i s not a s i m p l e one f o r a t l e a s t two
reasons. F i r s t , t h e r e i s an enormous d i f f e r e n c e between t h e four
low-absorbing OPEC coun t r i e s and t h e o the r nine. Kuwait, Qatar,
S a u d i A r a b i a and t h e UAE a c c o u n t e d f o r o i l r e v e n u e s o f $ 6 2
b i l l i o n i n 1974, $206 b i l l i o n i n 1980 and $104 b i l l i o n i n 1982,
with more and more spent on domestic consumption and investments
(39% i n 1 9 7 4 , 68% i n 1980, and 86% i n 1982).
Secondly, s i n c e the "low-absorbers" by d e f i n i t i o n a r e
unable t o consume most of t h e i r o i l revenues, they t h e r e f o r e had
s u b s t a n t i a l o p p o r t u n i t i e s for i n v e s t m e n t from 1974 t o 1982.
Figure 1 shows how the four low-absorbers have taken advantage of
t h i s s i t u a t i o n by l e t t i n g p e t r o l e u m i n v e s t m e n t grow from $700
m i l l i o n in 1971 t o more than $14 b i l l i o n i n 1981. This imp l i e s a
growth r a t e o f 35% p e r y e a r , a v e r y h i g h r a t e i n compar ison t o
o the r OPEC coun t r i e s and t h e rest of t h e t h i r d world.
The p r e s e n t s t u d y w i l l i n v e s t i g a t e the a c t i v i t i e s
behind t h e s e statist ics. The purpose w i l l be t o f o l low up a c t u a l
investments made by the four low-absorbing Gulf c o u n t r i e s during
the ten year per iod 1973-82. The emphasis w i l l be on petroleum-
r e l a t e d investments. However, o t h e r l a r g e - s c a l e investments w i l l
a l s o be included.
The o u t l i n e i s as f o l l o w s . The a n a l y s e s of a c t u a l
i n v e s t m e n t a l t e r n a t i v e s a r e i n S e c t i o n s 2 - 5 , w i t h one s e c t i o n
each for Kuwait , Qatar , S a u d i A r a b i a and t h e U n i t e d Arab
Emirates. F i n a l l y , conclus ions and a reas for f u r t h e r study w i l l
be presented i n Sec t ion 6 .
2
Figure 1
Capital Expenditures for the Middle East Petroleum Indus t ry
LNG-PLANTS I
O I L b GRS EXTRRCTION
;I 1'1 REFINERIES
P I P E L I N E S
CHEHl CRL PLRNTS
3
The s m a l l kingdom of Kuwai t , w i t h about 1.45 m i l 1 i o n
inhab i t an t s i n an a r e a of 17,000 km , has one of t h e h i g h e s t per
c a p i t a incomes i n t h e world. Though t h e country i s q u i t e young -
i t became i n d e p e n d e n t i n 1961 - i t s o i l h i s t o r y s t r e t c h e s back
ove r s e v e r a l decades.
2
I n 1933, t h e Anglo-Persian O i l Company ( today B r i t i s h
Petroleum) and t h e Gulf O i l Company a p p l i e d f o r a concession. One
year l a t e r they formed t h e Kuwait O i l Company (KOC) which s t a r t e d
t o e x p l o r e t h e c o n c e s s i o n a r e a i n 1936. I n 1938 o i l was
discovered i n Burgan i n Southern Kuwait. Af t e r t he Second World
War Burgan was d e v e l o p e d , and e x p o r t s s t a r t e d i n 1946. O i l was
d iscovered a t Margwa i n 1951 and a t al-Ahmadi i n 1952.
Af te r 1955 KOC s t a r t e d t o d r i l l i n Northern Kuwait. O i l
was d iscovered a t Raudhatain i n t h e same year, a t Bahra i n 1956,
a t S a b r i y a h i n 1957, a t Minag i sh i n 1959 and a t Umm Guda i r i n
1962.
In 1974, t he Government took over 60% of t h e assets of
KOC i n c l u d i n g a r e f i n e r y and a n LPG p l a n t a t al-Ahrnadi. The
f ol lowing year t h e Government acquired t h e remaining 40% equi ty .
BP and Gul f O i l were g u a r a n t e e d l i f t i n g s of 500,000 b / d and
450,000 b / d r e s p e c t i v e l y a t a d i s c o u n t of 15 c e n t s / b a r r e l and
w i t h 60 days’ c r e d i t .
4
I n 1947, t h e American I n d e p e n d e n t O i l CO (Aminoi l )
app l i ed for a concession i n t h e Neut ra l Zone. D r i l l i n g s t a r t e d
in 1949 and o i l w a s d i scovered a t Wafra in 1953 and a t U r n Gudair
i n 1966. The company w a s t a k e n o v e r by t h e Government i n 1977
and was t r a n s f e r r e d t o KOC i n 1978.
The o f f shore r i g h t s of t he Meutral Zone were obtained
i n 1957-8 by t h e Arab ian O i l Company (AOC), end t h e K u w a i t i
Government obtained 10% of t h e equi ty of AOC. O i l w a s d i scovered
a t R h a f j i in 1960, at Hout in 1962, a t L u l u i n 1966 and a t D o r r a
i n 1967, I n 1974 t he Kuwaiti Government took o v e r an a d d i t i o n a l
202 of t h e e q u i t y of AOC.
The Kuwait N a t i o n a l P e t r o l e u m Company (KNPC) was
e s t a b l i s h e d i n 1960 t o be owned j o i n t l y by t h e Government and by
p r i v a t e K u w a i t i i n t e r e s t s . I t t o o k o v e r t h e d o m e s t i c
d i s t r i b u t i o n of p e t r o l e u m p r o d u c t s f rom KOC, and i n 1975 t h e
Government g a i n e d c o m p l e t e c o n t r o l of RNPC, The company now
opera t e s t h r e e r e f i n e r i e s , Mina Abdul la ( t aken o v e r from Aminoil
i n 19781, Mina al-Ahmadi ( former ly operated by KOC) and Shuaiba.
In a d d i t i o n , t h e Kuwai t S h e l l P e t r o l e u m Development
Company and t h e Kuwait Spanish Petroleum Company unsuccessful l y
d r i l l e d in Kuwait. Both companies are now d i s s o l v e d .
The main i n v e s t m e n t s i n K u w a i t i c r u d e oil p r o d u c t i o n
were made b e f o r e 1970. Crude o i l p r o d u c t i o n peaked i n 1972 a t
about 3,300,000 b/d, a f t e r which capaci ty u t i l i z a t i o n d e c l i n e d
s u b s t a n t i a l l y t o a l e v e l of about 800,000 b/d i n 1982. Table 1
g i v e s d e t a i l s of t h i s development, and it can be seen from t h e s e
s t a t i s t i c s t h a t t he d e c l i n e i n demand f o r crude o i l i s one f a c t o r
5
r e s p o n s i b l e € o r t h e d r o p i n p r o d u c t i o n . The e x p o r t of r e f i n e d
products has been more s t a b l e , a l though t h e r e has been a s l i g h t
d e c l i n e from a peak i n 1979.
Refinery c a p a c i t i e s were expanded a t Shuaiba i n 1973-76
and a new Isomax u n i t was introduced i n 1978 ( s e e Cent ra l Bank of
Kuwai t , 1980, p42). I n 1979 t h e r e w a s a r e d u c t i o n i n o u t p u t
capac i ty a t Mina al-Ahmadi lead ing t o an a lmost maximal use of
r e f i n e r y c a p a c i t i e s t h a t year. Since then Kuwaiti usage of i t s
r e f i n e r y capac i ty has d e c l i n e d t o a l e v e l of 0.57 i n 1981.
In s p i t e of t h i s low u s e , Kuwait h a s d e c i d e d t o
m o d e r n i s e and expand t h e p l a n t s in Mina al-Ahmadi and i n Mina
Abdul l a h . KPC's c a p i t a l was i n c r e a s e d by KD 1.5 b i l l i o n (=$5.4
b i l l i o n ) , t o cover t h e o u t l a y (see MEED, May 1983, p9). For Mina
al-Ahmadi, Japan Gasol ine obtained a c o n t r a c t worth between $500-
700 m i l l i o n f o r t h e i n s t a l l a t i o n of 11 new u n i t s by 1984. Late r
t h e same company o b t a i n e d an a d d i t i o n a l c o n t r a c t w o r t h
a p p r o x i m a t e l y K D 325 m i l l i o n t o i n s t a l l a n a d d i t i o n a l
d e s u l p h u r i s a t i o n u n i t , a h y d r o c r a c k i n g u n i t , a n o t h e r vacuum
d i s t i l l a t i o n u n i t and 8 f l u i d c a t a l y t i c c racking uni t . The f i n a l
s t r u c t u r e i s planned t o be completed i n 1986/87.
Furthermore, t h e r e f i n e r y capac i ty of Mina Abdul l a h
w i l l be expanded up t o a l e v e l of 250,000 b/d a t a c o s t of KD 230
m i l 1 ion. KPC's subs id i a ry , Kuwait Santa Fe Braun Engineering and
P e t r o l e u m P r o j e c t s Company g o t t h i s c o n t r a c t , i n c l u d i n g t h e
u p g r a d i n g of e x i s t i n g u n i t s and t h e i n s t a l l a t i o n o f new
process ing u n i t s ( f o r d e t a i l s , s e e Arab O i l & Gas Directory, 1983
~162). The aim i s t o expand r e f i n e r y o u t p u t by 93,000 b / d of
naphtha, 50,000 b/d of gaso l ine, 118,000 b/d of ATK, 117,000 b/d
6
of d i e s e l and 82,000 b / d of low s u l p h u r o i l . A t t h e same t i m e
f u e l o i l p r o d u c t i o n w i l l be r educed by a l m o s t 100,000 b/d .
A l t o g e t h e r , t h i s means t h a t o u t p u t w i l l be d o u b l e d from a b o u t
352,000 b / d t o d a y to 7 2 5 , 0 0 0 b / d when t h e i n v e s t m e n t i s
completed, 1
I n t h e petrochemical s e c t o r , Petrochemical I n d u s t r i e s
Corporation (PIC) i s a wholly-owned subs id ia ry of KPC. I n 1964,
PIC, Gulf O i l and BP s e t up t h e Kuwait Chemica l F e r t i l i z e r
Company (KCPC) t o ope ra t e a petrochemical p l a n t a t Shuaiba ( P l a n t
A) , p r o d u c i n g u r e a , s u l p h u r i c a c i d , ammonia and ammonium
s u l p h a t e . I n 1 9 7 3 , PIC t ook over t h e s h a r e s o f BP and Gul f O i l
i n t h e company. Then i n 1977 t h e p l a n t c a p a c i t y was expanded
from 550 tonneslday t o 950 tonnes/day.
PIC a l s o opera tes P l a n t B a t Shuaiba, which inc ludes 2
urea u n i t s (670 tonnes/day) and 2 ammonia u n i t s (800 tonneslday).
These u n i t s s t a r t e d t o o p e r a t e i n 1971-72, and i n 1979 and 1981
two new ammonia u n i t s (1,000 tonneslday each) were contracted.
In 1980 a M e l a m i n e p l a n t a t S h u a i b a w e n t i n t o
product ion w i t h a capac i ty of 15,000 tonnes/year and at a c o s t of
KD 10 m i l l i o n . The p r o j e c t i s owned by t h e Kuwai t Melamine
Industries Company (KMIC).
A p l a n t t o produce 420,000 tonneslyear of aromatics and
350,000 tonnes lyear of o l e f i n s was scheduled for Shuaiba i n 1984.
However, t h e $1,3b c o n t r a c t t o t h e K P C subsidiary h a s been
abandoned. I n s t e a d PIC expanded i t s c a p a c i t y by buy ing 25% of
t h e West German Company Hoechst (see Otaqui 1983, p. 19). PIC is
a l s o p a r t i c i p a t i n g i n an ammonia complex a t S i t r a , Bahrain.
7
F i n a l l y , P I C has s i g n e d a c o n t r a c t wor th KD 3.6
m i l l i o n wi th Tokuyame Soda Company of Japan for t h e cons t ruc t ion
of a 75 tonneslday c h l o r i n e p l a n t a t Shuaiba. A second u n i t w i l l
be a 150 tonneslday s a l t f a c i l i t y a t a cos t of KD1.3m.
Turn ing t o the n a t u r a l gas s e c t o r , t h e r e a r e t h r e e
areas from which i t is o b t a i n e d , namely t h e n o r t h ( R a u d h a t a i n
and S a b r i y a ) , t h e west ( M i n a g i s h , Umm Guda i r and Sou th Umm
Gudair) and the south (Burgan and Magwa-Ahmadi). Most of the gas
i s sent by p i p e l i n e t o be processed a t Shuaiba.
Kuwait h a s two LPG p l a n t s , one i n Mina al-Ahmadi and
a n o t h e r i n Shua iba , of which t h e t o t a l c a p a c i t y is 5.5 m i l 1 i o n
tonnes lyear (about 110,000 b/d i n terms of output) . However, t h e
o p e r a t i o n i s f a r be low c a p a c i t y , m a i n l y b e c a u s e a s u b s t a n t i a l
amount o f t h e gas i s “ a s s o c i a t e d ’ ’ ( w i t h t h e p r o d u c t i o n of c r u d e
oil).
Over t h e l a s t 1 5 y e a r s , Kuwait O i l T a n k e r s Company
(KOTC), a KPC subs id i a ry , has g r e a t l y expanded its t anker f l e e t .
I n 1981 i t owned 17 o i l t a n k e r s wi th a capac i ty of 2,408,000 dwt
and four LPG c a r r i e r s of 71,650~11~ each. Furthermore, o rde r s have
been p l a c e d for two l a r g e c r u d e ca r r i e r s (each of 290,000 dwt)
and t h r e e p r o d u c t c a r r i e r s ( e a c h o f 65,000 dwt - see MEED, May
1983). The K u w a i t i Government h a s f o r c e d i t s c u s t o m e r s t o u s e
K u w a i t i t a n k e r s f o r a t least 50% of t h e i r p u r c h a s e s . Most LPG
s a l e s go t o Japan.
Kuwait has a l s o i n v e s t e d i n p i p e l i n e s f o r c r u d e o i l ,
n a t u r a l g a s and r e f i n e d p r o d u c t s . They a r e o p e r a t e d by K O C
e x c e p t f o r two submar ine l i n e s f rom Mina A b d u l l a h o p e r a t e d by
KNPC.
8
Funds have a l s o b e e n a l l o c a t e d for i n d u s t r i a l
development. For example, t he Shuaiba Area Authori ty (SAA) has
r e c e i v e d a c e r t a i n amount f o r t h e e x p a n s i o n o f i t s
i n f r a s t r u c t u r e , and a J a p a n e s e c o n s o r t i u m h a s o b t a i n e d KD 113
m i l l i o n f o r t he cons t ruc t ion of e i g h t new 300MW t u rb ines a t Ras
al-Zour t o be completed about 1987.
I n t o t a l , t h e l a r g e s t i n v e s t m e n t p r o j e c t s i n Kuwai t
h a v e been t h e r e f i n e r y e x p a n s i o n i n Mina Al-Ahrnadi and Mina
Abdullah. An overview of p l a n t s , da t e s , c o s t s and o rgan i sa t ions
is presented i n Table 2.
9
3. IXVESRIEHTS IB QATAR
Qatar i s s m a l l e r than Kuwait, w i t h 230,000 i n h a b i t a n t s
in a n a r e a of 10 ,200 km’, and the h i g h e s t GNP p e r c a p i t a i n t h e
world (about $27,000 i n 1981). Qatar became independent i n 1971.
Its o i l h i s t o r y s t a r t e d i n 1931, when t h e Anglo-Persian
O i l Company (now BP) c a r r i e d o u t a d e t a i l e d g e o l o g i c a l
i n v e s t i g a t i o n o f t h e a r e a . The a c t u a l e x p l o r a t i o n was made by
P e t r o l e u m Deve 1 opment Company (wh ich I a t e r became t h e Q a t a r
Pe t ro l eu rn Company) in a s s o c i a t i o n w i t h t h e Iraq P e t r o l e u m
Company, p a r t l y owned by Anglo P e r s i a n O i l Company, O i l was found
i n Dukhan i n 1938 and product ion reached a l e v e l of 40,000 b/d.
The w e l l s were s e a l e d d u r i n g t h e Second World War,
A new t e r m i n a l was a f t e r which p r o d u c t i o n r e - s t a r t e d i n 1947.
completed i n Umm Said from which shipments commenced in 1949.
I n 1960, t he S h e l l Company of Qatar found o i l o f f shore
a t Idd a l -Sha rg i and a t Maydan Mahzam. Ten years l a t e r a t h i r d
o f f shore f i e l d was discovered a t Bul Hanine.
In 1973, t he Government of Qatar took over 25% of Qatar
Petroleum Company and She1 1 Company of Qatar. The Qatar General
Petroleum Corporat ion (QGPC) was e s t a b l i s h e d i n 1974 and acquired
a l l shares i n t h e s e two companies,
The German f i r m W i n t e r s h a l l s i g n e d a p r o d u c t i o n
10
agreement (1973) f o r t he North oilfields, which was t r a n s f e r r e d
t h r e e years l a t e r i n t o a p r o d u c t i o n - s h a r i n g agreement . T h i s
agreement i s now terminated, and two o ther companies, t he Holker
Company of t h e U.S. and t h e Qatar O i l Company of Japan, have a l s o
re1 inquished t h e i r off shore concessions,
O i l was found a t Al-Bunduq on t h e b o r d e r w i t h Abu
Dhabi, in 1972. Product ion i s shared e q u a l l y w i t h Abu Dhabi and
managed by Abu Dhabi Marine Areas (ADMA). Qatar's concession i s
h e l d by t h e Bunduq Company ( s e e E l Mallakh 1979, p34).
The main e x p l o r a t i o n for o i l f i e l d s h a s now ended. QGPC
had f i v e rigs i n o p e r a t i o n i n 1981, t h r e e o n s h o r e and two
offshore. The main product ion of o i l t akes place on the Dukhan
f i e l d ( o n s h o r e ) and on t h e t h r e e o f f s h o r e f i e l d s of Idd a l -
S h a r g i , Maydan Mahzam a n d B u l H a n i n e . ( F o r t h e s i z e of
production, see Table 3).
O i l i s produced mainly f o r e x p o r t , with o f f s h o r e o i l
being shipped from t h e H a l u l I s l a n d terminal . A s u b s t a n t i a l p a r t
of t h e s e e x p o r t s g o e s t o J a p a n , F r a n c e , I t a l y and t h e
Netherlands.
Qatar Owns two r e f i n e r i e s , s i t u a t e d a t Umm Said. The
f i r s t w i t h a capac i ty of 12,000 b/d i s small, bu t t he second one,
completed i n 1983, can produce 50,000 b/d. These r e f i n e r i e s a r e
operated by t h e Nat iona l O i l D i s t r i b u t i o n Company (NODCO).
While t h e o i l resources of Qatar are l i m i t e d and may
be d e p l e t e d i n twenty years' t i m e , t h e r e i s a n abundance of
n a t u r a l gas. C o n s e q u e n t l y , n a t u r a l g a s i s used as f u e l and
feeds tock f o r i n d u s t r i a l a c t i v i t i e s i n Qatar.
Onshore n a t u r a l g a s i s o b t a i n e d a t t h e Dukham f i e l d
11
Figure 2
Flow of Gas Products in Qatar
PLANT 1 DISTRIBUTION UMM S A I D I 1
DOMESTIC CONSUMPTION
PE.TF0- CHEMICAL PLANT
I
1 LNG I
I I I RASLAFFAN'
I
\ h LI ZER
12
b o t h as a s s o c i a t e d and n o n - a s s o c i a t e d g a s (see F i g u r e 2).
Associated gas i s obtained as a s o l u t i o n gas which i s separa ted ,
c o l l e c t e d and compressed and t h e n t r a n s m i t t e d t o a s t r i p p i n g
p l a n t a t F a h a h i l . One o u t p u t f rom t h i s p l a n t i s a me thane r i c h
gas - s o l d t h r o u g h t h e d o m e s t i c d i s t r i b u t i o n s y s t e m - bu t t h e
main output i s n a t u r a l gas l i q u i d (NGL), which is t r a n s f e r r e d by
p i p e l i n e t o one of t h e NGL p l a n t s a t Umm Sa id . The o u t p u t f rom
t h i s p l a n t i s propane and butane f o r domestic use, g a s o l i n e f o r
expor t and an ethane r i c h gas suppl ied t o a petrochemical p l a n t .
Associated gas can a l s o be produced d i r e c t l y from two
so -ca l l ed gas caps a t t h e Dukhan f i e l d , a l though t h i s a l t e r n a t i v e
is very ra re ly used.
The non-associated gas a t t h e Dukhan f i e l d is obta ined
a t Khuff . E i g h t p l a n t s a r e a v a i l a b l e , of which f o u r h a v e a
c a p a c i t y of 2.8 m i l l i o n m / d a y , and f o u r h a v e a c a p a c i t y o f 1.4
m i l l i o n m /day. A t p re sen t , no more t han 40% of t h i s capac i ty is
used.
3
3
The o f f s h o r e a s s o c i a t e d g a s i s s e p a r a t e d a n d
compressed a t t h r e e p l a t fo rms and t r ansmi t t ed t o the second NGL
p l a n t a t Umm Said toge the r wi th the separa ted gas l i q u i d . NGL is
obta ined f o r export , e thane r i c h gas f o r t h e petrochemical p l a n t
and methane r i c h gas f o r f e r t i l i s e r production.
Off shore non-associated gas i s no t c u r r e n t l y produced,
but s u b s t a n t i a l reserves a r e a v a i l a b l e i n the North F i e l d ( s e e
Pe t r i e -R i t ch ie , 1982 and 1983).
The t o t a l p r o d u c t i o n of n a t u r a l g a s in Q a t a r i n 1981
was a b o u t 12.2 m i l l i o n m3/day w i t h a s u b s t a n t i a l l y h i g h e r
c a p a c i t y . I n o r d e r t o make b e t t e r u s e of t h e e x i s t i n g r e s e r v e s
13
and c a p a c i t i e s t h e Qatar i Government has d e c i d e d t o i n v e s t
$5 b i l l i o n i n a new LNG p l a n t a t Ras Laf fan . T h i s p r o j e c t , a
j o i n t ven tu re wi th BP and CFP (Compagnie Franca ise des P e t r o l e s ) ,
w i l l make it p o s s i b l e t o process about 25 m i l l i o n m3/day of LNG.
The f i r s t NGL f a c i l i t y a t Umm Said can produce 650,000
t o n n e s of LPG f rom 310,000 b / d of o n s h o r e c rude . The second
f a c i l i t y can produce 460,000 t o n s of LPG f rom 375 ,000 b / d of
o f f s h o r e c rude , I n J u l y 1 9 8 1 27% of this c a p a c i t y was used.
A l l LPG is exported,
T u r n i n g t o p e t r o c h e m i c a l p r o d u c t i o n , t h e Qatar
P e t r o c h e m i c a l s Company (QAPCO) i s a j o i n t v e n t u r e be tween t h e
F rench Company Cdf Chimie and QGPC, I t o p e r a t e s one e t h y l e n e
p l a n t (770 t o n n e s l d a y ) and one p o l y e t h y l e n e (LDP) p l a n t (380
tonnes/day), both in Umm Said. A t h i r d high-density po lye thy lene
p l a n t (190 t o n n e s l d a y ) i s also s c h e d u l e d f o r Umm Sa id . Cdf and
QGPC have a l s o inves t ed i n a petrochemical complex i n Dunkirk,
France.
The Q a t a r F e r t i l i z e r Company (QAFCO) o p e r a t e s two
p l a n t s , e a c h p r o d u c i n g 900 t o n n e s l d a y of ammonia and 1,000
tonnes/day of urea. A t h i r d p l a n t i s scheduled.
Most o i l is exported by f o r e i g n v e s s e l s (QGPC owns one
t a n k e r ) f rom H a l u l I s l a n d , Umm S a i d and Ras Abu Abbut ( r e f i n e d
products ) .
There are s e v e r a l l a r g e investment p r o j e c t s o u t s i d e t h e
petroleum sec tor . At Umm Said, an i r o n and s tee l p l a n t (700,000
tonnes/year) has been b u i l t for t he Qatar S t e e l Company (QASCO)
a t a c o s t of about QR 1.6 b i l l i o n ( see E l Mal lakh 1979, p87). It
w i l l use about 10 m i l l i o n m 3 /day of n a t u r a l gas a s feedstock.
14
A power and d e s a l i n a t i o n p l a n t a t R a s Abu Fontae n e a r
Doha was i n i t i a t e d in 1977. The t o t a l c o s t i s est imated a t about
QR 2.0 b i l l i o n , producing 612 MW power and 16,000 m i l l i o n m3 /day
of d e s a l i n a t e d water.
I n 1 9 6 7 t h e Q a t a r N a t i o n a l Cement Company s t a r t e d a
cement f a c t o r y i n o r d e r t o u t i l i z e t h e l i m e s t o n e and clay
a v a i l a b l e a t Umm Bab. P r o d u c t i o n is assumed t o be 600,000
tonnes/year a t a c o s t of about QR 0.8 b i l l i o n .
Table 4 g i v e s an overview of p l a n t s , da t e s , c o s t s and
o rgan i sa t ions f o r t he main investments in Qatar.
15
4. IBIIESTHEHTS IR SAHDI ARABIA
Saudi Arabia has t h e l a r g e s t o i l r e s e r v e s i n the world
(about 23 b i l l i o n tonnes), wi th both t h e l a r g e s t onshore (Ghawar)
and t h e l a r g e s t o f f s h o r e (Safania) o i l f i e l d s . About 9.68 m i l l i o n
i n h a b i t a n t s l i v e i n an a rea of 2,150,000 km.
After a survey by t he B r i t i s h Major Holmes i n 1923-25,
o i l was d i s c o v e r e d i n B a h r a i n i n 1932. As a consequence ,
Standard O i l of C a l i f o r n i a (now Chevron) formed a subs id i a ry , t h e
C a l i f o r n i a Arabian Standard O i l Company (CASOC), which s t a r t e d t o
e x p l o r e t h e A r a b i a n p e n i n s u l a . I n 1937, t h e Texas O i l Company
took o v e r 50% of CASOC. One y e a r l a t e r o i l w a s found at Dammam
and t h e f i r s t expor t s went from Ras Tanura i n May 1939. Then i n
1940 two o i l f i e l d s , Abu Hadriya and Abqaiq, were discovered.
I n 1944, CASOC was changed i n t o Aramco, and i n 1 9 4 7 ,
S t a n d a r d O i l of New Jersey (now Exxon) and Socony Vacuum (now
Mobil) jo ined Aramco, One year l a t e r t h e l a r g e s t o i l f i e l d in t he
world was found a t Ghawar.
In 1949, G e t t y Oil Company obtained an o i l concession
for h a l f t he Neut ra l Zone ( t h e o the r h a l f had a l r e a d y been g i v e n
t o Aminoil by t h e Kuwaiti Government). Wafra o i l f i e l d was found
i n 1953, South Fuwaris i n 1963 and S o u t h Umm Guda i r i n 1966. AS
ment ioned in S e c t i o n 2 above , t h e A r a b i a n O i l Company (AOC) had
16
been g r a n t e d t h e o f f s h o r e r i g h t s of t h e N e u t r a l Zone i n 1 9 5 7 ,
where o i l was found in K h a f j i in 1960 and i n Hout i n 1963.
The Saudi Government took ove r 25% of Aramco i n 1973 8n
The process of t o t a l t akeove r s t a r t e d i n a d d i t i o n a l 352 i n 1974.
1976 and f i n i s h e d i n 1981.
Among the t h r e e companies managing crude o i l product ion
in S a u d i A r a b i a a t p r e s e n t , Aramco h a s b e e n most a c t i v e i n
expanding product ion capaci ty . Af te r o i l was found i n Ghawar i n
1948, p r o d u c t i o n s t a r t e d in Saf a n i y a h (19571, i n K h u r s a n i y a h
(19601, i n F a d i l i and K h u r a i s (19631, i n Man i fa (19641, i n Abu
Sa’fah (19661, i n B e r r i ( 1 9 6 7 ) and i n Z u l u f , M a r j a n a n d
Harmaliyah (1973). Fur ther d i s c o v e r i e s have been made at ‘Amad,
D a w 1 ( o f f s h o r e ) , Duhaynah, H u r a y r i , Jubah , N i t a and S a l s a 1
( o f f s h o r e ) as w e l l a s a t e x i s t i n g s i t e s a t Abqaiq , Duhaynah,
Jubah , J u r a y d and Z u l u f . By t h e end o f 1981 Aramco had 16
onshore and 11 of f shore d r i l l i n g r i g s i n operat ion. In add i t ion ,
t h e r e a r e p l a n s for investment i n four new “ c a n t i l i v e r ” o f f shore
d r i l l i n g platforms.
The t o t a l p r o d u c t i o n c a p a c i t y of S a u d i A r a b i a is
est imated a t 11-12 m i l l i o n b/d. A t Khurais Aramco has inves t ed
i n w a t e r i n j e c t i o n sys tems i n o r d e r t o m a i n t a i n this c a p a c i t y
l e v e l , Furthermore, i n 1982 product ion capac i ty was expanded by
investment i n gas-o i l s epa ra to r p l a n t s (GOSPs) a t t h e Marjan and
Z u l u f f i e l d s (more t h a n $500 m i l l i o n was a l l o c a t e d f o r t h i s
purpose).
The product ion of crude o i l i n Saudi Arabia ( see Tab le
5) peaked a t 9.9 m i l l i o n b /d i n 1980, of wh ich 97% came from
Aramco. The overwhelming p a r t of t h i s product ion was exported.
17
In t h e middle of 1982 product ion f e l l below 6 m i l l i o n b/d.
The r educ t ion i n sales of crude o i l may lend support t o
Saudi Arabia's d e c i s i o n t o go downstream and i n v e s t i n r e f i n e r y
capac i ty , This capac i ty has expanded from 700,000 b/d i n 1977 t o
1,200,000 b/d i n 1983, and t h i s process seems set t o cont inue in
t h e f u t u r e .
Ras Tanura is t h e o l d e s t and l a r g e s t r e f i n e r y i n Saudi
Arabia, It has been opera ted by Aramco since 1945, when i t had a
a capac i ty of 50,000 b/d. It was expanded t o a l e v e l of 550,000
b / d i n 1976 and 713,000 b/d i n 1982. I t s main p r o d u c t s a r e LPG,
f u e l o i l , d i e s e l o i l and naphtha.
Petromin (Petroleum and Mineral Organisat ion) was s e t
up t o marke t and d i s t r i b u t e oil p r o d u c t s . However, i t a l s o
ope ra t e s two r e f i n e r i e s , one i n Jeddah and t h e o the r i n Riyadh.
The r e f i n e r y i n Jeddah o r i g i n a l l y ( i n 1968) had a
c a p a c i t y of 12,000 b / d , b u t was expanded to 70,000 b / d (in 1978)
and t o 110,000 b / d ( i n 1982). There a r e p l a n s t o expand i t
f u r t h e r up to a l e v e l of 265,000 b / d ( s ee Kingdom of S a u d i
A r a b i a , 1982, p63). The J e d d a h r e f i n e r y p roduces g a s o l i n e ,
d i e s e l o i l , f u e l o i l and naphtha.
I n Riyadh, t h e r e f i n e r g p r o d u c e s m a i n l y g a s o l i n e ,
d i e s e l o i l and a s p h a l t . It s t a r t e d i n 1974 a t a l e v e l of 15,000
b /d and when a new u n i t was comple t ed i n 1981, c a p a c i t y went up
t o 120,000 b/d.
Two r e f i n e r i e s o p e r a t e i n t h e N e u t r a l Zone, i n b o t h
cases w i t h f u e l o i l a s t h e main product, In Mina Saud, G e t t y O i l
h a s p roduced 50,000 b / d s i n c e 1958. I n K h a f j i , t h e A r a b i a n O i l
18
Company has had a product ion l e v e l of 30,000 b/d s i n c e 1966.
P e t r o m i n o p e r a t e s two s m a l l l u b e o i l r e f i n e r i e s i n
Jeddah i n a j o i n t ven tu re with Mobil O i l . Two more were under
c o n s t r u c t i o n at J u b a i l (12,000 b / d ) t o g e t h e r w i t h Texaco and
Chevron, and a t Yanbu (5,000 b / d ) i n p a r t n e r s h i p w i t h Ash land ,
but both have now been scrapped.
A t Yanbu, a s i x t h r e f i n e r y came into o p e r a t i o n a t t h e
b e g i n n i n g of 1983. T h i s i n v e s t m e n t , w i t h a c a p a c i t y of 170,000
b/d and a t a c o s t of $1.4 b i l l i o n , i s scheduled t o m e e t domestic
demand. It w i l l be f u l l y owned by Petromin.
T h r e e l a r g e e x p o r t r e f i n e r i e s are under cons t ruc t ion ,
i n J u b a i l (250,000 b/d), Babigh (325,000 b/d) and Yanbu (250,000
bid). The one in J u b a i l i s a j o i n t ven tu re between Petromin and
S h e l l and w i l l produce naphtha (97,000 b/d), gas o i l (92,000 b/d)
and h igh su lphur f u e l o i l (67,000 b/d). It is t o be completed i n
1985 a t an es t imated c o s t of $1.4 b i l l i o n .
The r e f i n e r y in Yanbu w i l l be o p e r a t e d j o i n t l y by
P e t r o m i n and Mobi l . I t s p r o d u c t i o n i s s e t t o d i e s e l o i l . and
h e a t i n g f u e l (71,000 b / d ) , heavy o i l (53,000 b / d ) g a s o l i n e
(75,000 b/d), j e t f u e l (36,000 b/d) and naphtha (18,000 b/d). It
was completed i n 1984 a t an est imated c o s t of $1.3 b i l l i o n .
The r e f i n e r y p r o j e c t i n Rabigh i s a j o i n t v e n t u r e
between Petromin and the Greek f i r m P e t r o l a , and was intended t o
b e comple t ed i n 1984-85 b u t h a s b e e n d e l a y e d by a t l e a s t two
years ( s e e Harvey 1984). I t s i n v e s t m e n t c o s t i s e s t i m a t e d a t
$2.6 b i l l ion.
Two r e f i n e r y p r o j e c t s a t Juaymah and Qass in have been
19
c a n c e l l e d and a t h i r d a t Al-Shukaikh has b e e n " s h e l v e d " s i n c e
September 1983.
I n Saud i A r a b i a t h e p r o d u c t i o n of n a t u r a l gas i s
a s soc ia t ed t o t h a t of crude o i l . I n the mid-l970's, on ly 15% of
the produced gas w a s u t i l i s e d , but by 1982 t h i s had increased t o
42%. The growth i n n e t product ion comes mainly from the Ghawar
f i e l d , where a Master Gas S y s t e m (MSG) has been e s t a b l i s h e d a t a
cos t of $12 b i l l i o n ( see Arab O i l & Gas Direc tory , 1983, p283).
This gas w i l l mainly be used as feedstock i n t h e two i n d u s t r i a l
complexes a t J u b a i l and Yanbu, b u t p r o d u c t s f rom t h e MSG w i l l
a l s o i n c l u d e LPG and g a s o l i n e f o r e x p o r t , for u s e in d o m e s t i c
i ndus t ry , f o r e l e c t r i c i t y genera t ion and f o r water desa l ina t ion .
The t o t a l s i z e of t h e MSG i s 625,000 b/d p r o c e s s e d a t
t h r e e p l a n t s a t Berr i (71,300 b / d ) , Shedgum (270,000 b / d ) and
Uthmaniya (270,000 b /d) , A t f u l l c a p a c i t y t h e MSG can p r o d u c e
290,000 b /d of sweet g a s , 537,000 b / d of NGL and 11.5 t o n n e s / d a y
of s u l p h u r . The NGL i s t a k e n t o two f r a c t i o n a t i o n p l a n t s a t
Juaymah and Yanbu w i t h a p r o c e s s i n g c a p a c i t y of 390,000 b/d and
300,000 b / d r e s p e c t i v e l y . These two p l a n t s p roduce e t h a n e ,
propane, butane, pentane and n a t u r a l gaso l ine ,
P i p e l i n e t r a n s p o r t a t i o n p l a y s a c e n t r a l r o l e i n t h e o i l
and g a s s e c t o r s i n S a u d i Arab ia . Between 1950 and 1975 T a p l i n e
( t h e Trans-Arabian P i p e l i n e Company) operated a 1213 km p i p e l i n e
between Saudi Arabia and Lebanon wi th a capac i ty of 500,000 b/d.
Af te r 1975 it w a s in use f o r s h o r t e r per iods on ly , u n t i l I s r a e l i
bomb a t t a c k s forced it t o c l o s e down. Inside Saudi Arabia about
45 d i f f e r e n t petroleum p i p e l i n e s a r e operated by Aramco and t h r e e
by P e t r o m i n (see Arab O i l & Gas D i r e c t o r y , 1983, ~ 2 9 0 ) . Among
20
t h e l a r g e s t and most i m p o r t a n t a r e t h e two l o n g - d i s t a n c e
p i p e l i n e s connecting t h e o i l f i e l d s i n Abqaiq w i t h Yanbu a t t h e
Red Sea. One of them c a l l e d P e t r o l i n e c a r r i e s crude o i l , and has
a c a p a c i t y of 1-85 m i l l i o n b/d, I t was comple t ed i n 1981 a t a
c o s t of $1.6 b i l l i o n ,
P e t r o l i n e h a s n e v e r o p e r a t e d a t f u l l c a p a c i t y . At t h e
b e g i n n i n g of 1982 t h e f l o w was 1.35 m i l l i o n b/d. I n s p i t e of
e x c e s s c a p a c i t y t h e f e a s i b i l i t y of i n c r e a s i n g c a p a c i t y by a n
a d d i t i o n a l 500,000 b / d , up t o 2.35 m i l l i o n b / d i s b e i n g
inves t iga t ed . The cos t of t h i s expansion is est imated a t $800-
1,000 m i l l i o n . The e x p a n s i o n i s j u s t i f i e d on t h e grounds t h a t
P e t r o l i n e can then supply western r e f i n e r i e s in Yanbu and Rabigh
w i t h o i l f rom e a s t e r n f i e l d s . T h e r e a r e a l s o p l a n s t o b u i l d a
l a r g e s i z e o i l s t o r a g e cavern d i r e c t l y connected t o t h e wes tern
end of P e t r o l i n e , Such a n i n v e s t m e n t would c o s t a b o u t $5,000
m i l l i o n ( s e e MEED, September 1983 and MEED, October 1983, ~13).
The second p i p e l i n e l i n k i n g t h e Abqaiq o i l f i e l d s t o
Yanbu i s a h i g h - p r e s s u r e one f o r t h e t r a n s p o r t of N G L which was
c o m p l e t e d i n 1980. I n t h i s w a y BGL produced a t Ghawar c a n b e
t r a n s f e r r e d t o Yanbu e i t h e r f o r e x p o r t o r u s e as a f e e d s t o c k i n
t h e Yanbu p e t r o c h e m i c a l complex. F u r t h e r m o r e , p a r t of t h e NGL
w i l l b e used a s a f u e l f o r t h e p a r a l l e l c r u d e o i l l i n e . The
capac i ty of t h i s gas p i p e l i n e i s 270,000 b/d of NGL and ethane.
Saudi Arabia has a l s o made s u b s t a n t i a l investments in
p o r t capacities. The port of Ras Tanura can s imul taneous ly f i l l
two s u p e r t a n k e r s (150,000-500,000 dwt). The Juaymah p o r t c a n
accommodate s h i p s up to 700,000 dwt. At Z u l u f , t h e r e i s 8 1.7
21
m i l l i o n - b a r r e l f l o a t i n g s to rage v e s s e l . The po r t a t Yanbu has
t h r e e t a n k e r l o a d i n g b e r t h s , and t h e one a t Rab igh has n i n e
ber ths . The po r t a t Yanbu w i l l be expanded s u b s t a n t i a l l y by t h e
end of t h e 1980s. The Kingdom o p e r a t e s w i t h 30 r e g i s t e r e d
tankers wi th a t o t a l capaci ty of more than 4 mil l i o n dwt.
Turning t o t h e petrochemical s e c t o r , t h e r e are now four
p l a n t s i n o p e r a t i o n and s i x p r o j e c t s under w a y . One of t h o s e
a l r e a d y i n o p e r a t i o n is t h e S a f c o f e r t i l i z e r p l a n t a t Dammam
which was completed i n 1968. It uses n a t u r a l gas as a feeds tock
and has one s u l p h u r r e c o v e r y u n i t (30 t o n n e s s u l p h u r / d a y + 50
t o n n e s s u l p h u r i c a c i d l d a y ) , one u r e a u n i t (600 t o n n e s
ammonia/day), o n e l a r g e r u r e a u n i t (1,100 t o n n e s u r e a j d a y ) as
w e l l as water d e s a l i n a t i o n and coo l ing u n i t s , steam b o i l e r s and
power genera t ion uni t s .
Another u n i t i n ope ra t ion i s Petromin’s Su lphur i c Acid
P l a n t (Pe t roc id) a t Dammam. This was completed i n 1971 and has a
capac i ty of 50 tonneslday.
A t J u b a i l , t h e Al-Jubai l F e r t i l i z e r Company i s a j o i n t
ven tu re between t h e Saudi A r a b i a n B a s i c I n d u s t r i e s C o r p o r a t i o n
(SASIC) and t h e Taiwan F e r t i l i z e r C o r p o r a t i o n . The p l a n t came
i n t o o p e r a t i o n i n 1983 w i t h a n i n v e s t m e n t c o s t o f a b o u t $350
m i l l i o n . It h a s a c a p a c i t y of 300,000 t o n n e s / y e a r of l i q u i d
ammonia and 500,000 tonnes lyear of urea. There are a l s o s t o r a g e
f a c i l i t i e s a v a i l a b l e wi th 8 capac i ty of 20,000 tonnes of ammonia
and 100,000 tonnes of urea.
Also a t J u b a i l t h e Saudi Methanol Company (A1 Bazi) i s
a j o i n t ven tu re between SABIC and a Japanese consortium headed by
Mi t sub i sh i Gas. It produces 600,000 tonnes/year of methanol, and
22
was c o m p l e t e d i n 1983 a t a n i n v e s t m e n t c o s t of a round $300
mil l ion .
O f t he s i x p r o j e c t s under way, one is s i t u a t e d a t Yanbu
and f i v e a t J u b a i l . A t Yanbu, SABIC and Mobil O i l w i l l ope ra t e a
j o i n t ven tu re c a l l ed Saudi Yanbu Petrochemical Company (YAMPET).
The p l a n t w i l l i nc lude an e t h y l e n e p l a n t (450,000 tonnes lyear ) , a
l ow-dens i ty p o l y e t h y l e n e p l a n t (200,000 t o n n e s l y e a r ) , a h i g h
dens i ty po lye thy lene u n i t (90,000 t o n n e s l y e a r ) and an e t h y l e n e
g l y c o l p l a n t (200,000 t o n n e s / y e a r ) . The c o s t i s e s t i m a t e d a t
$2.5 b i l l i o n and t h e p r o j e c t w i l l be completed i n 1985.
A t J u b a i l , t he Al-Jubai l Petrochemical Company (Remya)
is 8 j o i n t v e n t u r e be tween SABIC and Exxon. The p l a n t , w i t h a n
investment cos t es t imated a t $1.1 b i l l i o n , w i l l produce 260,000
tonnes lyear of low dens i ty po lye thy lene (LDP). It w i l l come i n t o
ope ra t ion in 1985.
The Saud i P e t r o c h e m i c a l Company (SADAF) i s a j o i n t
ven tu re between SABIC and Pecten, a subs id i a ry of S h e l l O i l . I t s
complex at J u b a i l w i l l h a v e an a n n u a l p r o d u c t i o n c a p a c i t y of
656,000 tonnes/year of e thy 1 ene, 295,000 tonnes/year of s ty rene ,
281,000 tonnes/year of i n d u s t r i a l e thano l , 454,000 tonnes/year of
e t h y l e n e d i c h l o r i d e , 377,000 tonnes/year of c a u s t i c soda, 333,000
tonnes/year of c h l o r i n e and 327,000 tonnes/year of ethy lbenzene.
The investment cos t is es t imated a t $2.9 b i l l i o n and t h e p l a n t is
t o be completed i n 1985.
The A r a b i a n P e t r o c h e m i c a l Company (Petrokernya) i s
owned by SABIC. It w i l l produce 500,000 tonnes/year of e t h y l e n e
and 350,000 tonnes/year of e t h y l e n e g l y c o l . I t s investment c o s t
23
i s es t imated a t $1.5 b i l l i o n and the p l a n t w i l l be completed i n
1985.
The E a s t e r n P e t r o c h e m i c a l Company (Sha rq ) i s a j o i n t
v e n t u r e be tween SABIC and a J a p a n e s e conso r t ium, T h i s J u b a i l
p l a n t i s t o be comple t ed i n 1985 and w i l l h a v e a p r o d u c t i o n
capac i ty of 180,000 tonnes/year f o r low d e n s i t y po lye thy lene and
300,000 t o n n e s l y ear f o r e t h y l e n e g l y c o l . The t o t a l investment
c o s t is est imated a t $1.5 b i l l i o n .
The Nat iona l Methanol Company ( Ibn Sinaq) is a j o i n t
v e n t u r e be tween SABIC ( 5 O X ) , C e l a n e s e A r a b i a n (25x1, and Texas
E a s t e r n A r a b i a n (25%). The p l a n t w i l l p roduce me thano l w i t h a
c a p a c i t y of 650,000 t o n n e s l y e a r . It was comple t ed i n 1984 and
the t o t a l cos t is est imated a t $400 m i l l i o n .
For most of t h e s e p r o j e c t s e t h a n e and methane a r e t h e
f e e d s t o c k s , which a r e t o b e s u p p l i e d by Pet romin . Sha rq and
K e m y a w i l l g e t t h e i r s u p p l i e s of e t h y l e n e from Petrokemya and
Sadef r e s p e c t i v e l y .
When a l l t h e petrochemical investments have been made,
SABIC w i l l b e a b l e t o p roduce a b o u t 1.6 m i l l i o n t o n n e s / y e a r o f
e thy lene , and 1.3 m i l l i o n tonnes lyear of urea, a s w e l l as minor
q u a n t i t i e s of o the r petrochemicals.
I n a d d i t i o n , S a u d i A r a b i a h a s a l l o c a t e d a l o t of
cap i t a l t o o t h e r areas of i n d u s t r i a l development. Examples are
$5.0 b i l l i o n for t h e a i r p o r t i n J e d d a h ( see B a i l e y 19811, $3.2
b i l l i o n f o r t h e a i r p o r t in Riyadh, $1.1 b i l l i o n f o r a wate r
p i p e l i n e be tween J u b a i l and Riyadh ( s e e O'Sull i v a n 19801, $425
m i l l i o n and $430 m i l l i o n r e s p e c t i v e l y f o r water p i p e l i n e s t o A s i r
and between Shuaiba and Mecca, $370 m i l l i o n f o r a power s t a t i o n
24
a t Riyadh, and a b o u t $275 m i l l i o n f o r s i l o s a t Riyadh, D a m m a m ,
Jeddah, Qassin and Khamis.
Saudi I r o n & S t e e l Company (Hadeed) has i nves t ed about
$700 m i l l i o n in one p l a n t a t J u b a i l i n order t o produce 800,000
tonneslyear of sponge i r o n and s t ee l b i l l e t s , rods and bars. It
i s o p e r a t e d a s a j o i n t v e n t u r e be tween SABIC and Kork -S tah l of
West Germany, Another j o i n t v e n t u r e h a s been set u p as t h e
Saudi-Kuwait Cement M a n u f a c t u r i n g Company. SABIC i s a l s o
i n v o l v e d i n two l a r g e s c a l e a lumin ium p r o j e c t s o u t s i d e S a u d i
Arabia ( see MEED, November 1983).
A t p r e s e n t , S a u d i A r a b i a h a s a n o u t s t a n d i n g r e c o r d i n
t e r m s of d o m e s t i c i n v e s t m e n t s . They a r e c o n c e n t r a t e d in t h r e e
m a i n a r e a s : r e f i n e r i e s , p e t r o c h e m i c a l p l a n t s a n d g a s
d i s t r i b u t i o n . The inves tment e x p e n d i t u r e e x c e e d s $35 b i l l ion.
T a b l e 6 g i v e s a n o v e r v i e w of t h e a c t u a l p r o j e c t s i n terms of
da te s , c o s t s and organisa t ion .
25
The United Arab Emirates (UAE) w a s c o n s t i t u t e d i n 1971
a s a u n i o n be tween six of t h e " T r u c i a l " S t a t e s - Abu Dhabi ,
Dubai , S h a r j a h , Umm a l -Qiwain , Ajman and F u j a i r a h . Two months
l a t e r Ras al-Khaimah joined t h e group. These seven s ta tes w i t h a
p o p u l a t i o n of a b o u t 1.1 m i l l i o n i n a n a r e a of 83.650 km2 ( l e s s
than t h a t of Por tuga l ) possess o i l r e s e r v e s as l a r g e as those of
North America, and 3% of world gas r e se rves .
I n 1939 t h e T r u c i a l Coast Development O i l Company was
g i v e n t h e first o i l concession of Abu Dhabi. The f i r s t w e l l was
d r i l l e d i n 1950, but i t was not u n t i l 1960 t h a t oil w a s found a t
Bab. F u r t h e r d i s c o v e r i e s were t h e n made a t B u t t a s a in 1962, a t
Asab i n 1965, a t S a h i l i n 1972 and a t Jorm Yafour i n 1973. A t
t h a t t i m e t h e company had changed i t s name t o t h e Abu Dhabi
Petroleum Company (ADPC).
In 1953 t h e d'Arcy O i l Company Ltd g o t 8 6 5 years'
c o n c e s s i o n r i g h t f o r t h e d e v e l o p m e n t of Abu Dhabi's o f f s h o r e
areas. A new company - t he Abu Dhabi Areas Company (ADMA) - was formed i n o rde r t o make use of this concession. O i l was found a t
Umm Shaif in 1959 and a t Zakum i n 1965.
The Abu D h a b i N a t i o n a l O i l Company ( A D N O C ) w a s
c o n s t i t u t e d i n 1971 i n o r d e r t o g i v e t h e Government g r e a t e r
26
c o n t r o l o v e r t h e o i l s e c t o r . I n 1972 i t t o o k o v e r 25% of t h e
s h a r e s of ADPC and ADMA, f o l l o w e d by a n a d d i t i o n a l 35% i n 1974.
For o p e r a t i o n a l reasons two new s u b s i d i a r i e s were formed, namely
ADMA-OPCO i n 1977 and ADC0 i n 1978. These two companies produce
more than 90% of Abu Dhabi’s crude o i l output.
The Abu Dhabi Company Ltd (ADOCO) was g r a n t e d a n
o f f s h o r e concession i n 1967. O i l w a s d i scovered a t Mubarras in
1969.
In 1973, t h e T o t a l Abu al-Bukhoosh O i l Company (TAB)
was e s t a b l i s h e d i n order t o deve lop the Abu al-Bukhoosh f i e l d .
O i l had been discovered by ADMA i n 1969.
A c o n s o r t i u m headed b y Amerada Hess h a s o b t a i n e d an
o f f s h o r e concession r e l inqu i shed by ADMA. Oil was d iscovered in
1972 sou th of Arzanah I s l a n d .
The Abu Dhabi Marine Areas (ADMA) manage the Al-Bunduq
f i e l d i n c o o p e r a t i o n w i t h Q a t a r ( s e e S e c t i o n 3 above) . The Abu
Dhabi s t a t e owned company Nat ional Petroleum Cons t ruc t ion Company
(NPCC) h a s been working on a programme of w a t e r i n j e c t i o n and
enhanced recovery a t t h i s f i e l d s i n c e 1981.
The f i r s t o i l concession of Dubai was g i v e n t o t h e I r a q
P e t r o l e u m Company i n 1937. In 1963, t h e U S company Conoco t o o k
over t h i s concession and e s t a b l i s h e d the Dubai Petroleum Company
(DPC) . In 1954 Compagnie F r a n c a i s e d e s P e t r o l e s (CFP) and
Hispanoi l had e s t a b l i s h e d Dubai Marine Areas Ltd (DUMA) i n o rde r
t o manage an o f f s h o r e c o n c e s s i o n i n Dubai. Then, i n 1963, DPC
a c q u i r e d 50X of DUMA’S c o n c e s s i o n , b u t s o l d some of i t one y e a r
l a t e r t o W i n t e r s h a l l , Texaco and Sun O i l , The DUMA-DPC
27
cooperat ion has l e d t o d i s c o v e r i e s and product ion of o i l i n four
f i e l d s - Fateh (14661, Fateh South-West (19701, Rashid (1973) and
F a l a h (1976). A s n o o f f s h o r e i s l a n d i s a v a i l a b l e , DPC h a s
cons t ruc ted t h r e e underground s t o r a g e tanks ("khazzans"), each i n
t h e form of a g i a n t i n v e r t e d champagne g l a s s ( s e e Dixon, 1983).
Arc0 I n t e r n a t i o n a l O i l and Gas Company, a subs id i a ry t o
A t l a n t i c R i c h f i e l d , obtained an onshore concession i n 1980. One
year l a t e r the B r i t i s h Nat ional O i l Corporat ion (BNOC) took o v e r
o n e - t h i r d of i t . Then, i n 1982, o i l and g a s were d i s c o v e r e d a t
t h e Margham f i e l d .
DUMA-DPC accounts f o r t he total crude o i l product ion i n
Dubai u n t i l t h e Margham f i e l d comes i n t o operat ion, A t t he t i m e
when o t h e r OPEC c o u n t r i e s were f o r c e d t o c u t t h e i r p r o d u c t i o n ,
Dubai succeeded in k e e p i n g i t s p r o d u c t i o n a l m o s t c o n s t a n t a t a
l e v e l of about 350,000 b/d2.
I n S h a r i a , t h e C r e s c e n t P e t r o l e u m Company ( C P C )
o b t a i n e d an o f f s h o r e c o n c e s s i o n a t Abu Musa i n 1970. O i l w a s
d i s c o v e r e d a t t h e Hubarak f i e l d i n 1972 and o i l p r o d u c t i o n
s t a r t e d in 1974. However, t h e p r o d u c t i o n l e v e l has d e c l i n e d
s u b s t a n t i a l l y s i n c e then.
Amoco, a subs id ia ry of Standard O i l Company of Indiana,
o b t a i n e d a c o n c e s s i o n i n 1 9 7 8 f o r a n a r e a a t t h e b o r d e r w i t h
Oman. I n 1980 o i l was d i s c o v e r e d a t S a j a a , and p r o d u c t i o n
s t a r t e d i n 1982.
Mubarak and S a j a a a r e the o n l y p r o d u c i n g f i e l d s i n
S h a r j a h . W h i l e t h e p r o d u c t i o n a t Mubarak h a s d e c l i n e d f rom
60,000 b/d i n 1974 t o 9,900 b/d i n 1980, t h e Sajaa f i e l d s t a r t e d
28
i n 1982 a t a r a t e of 25,000 b / d of l i g h t o i l and 7 m i l l i o n
rn /day of n a t u r a l g a s , w i t h t h e g o a l of p r o d u c i n g f o u r t imes as
much i n four years.
3
I n Ras al-Kaimah s e v e r a l e f f o r t s t o o b t a i n crude o i l
were made , b u t s o f a r t h e r e h a s b e e n no d i s c o v e r y w o r t h
commercial e x p l o i t a t i o n .
Umm a l -Qiwa in found n a t u r a l g a s i n 1 9 7 6 but no c r u d e
o i l has yet been obtained.
The two r e m a i n i n g emirates F u i a i r a h and Aiman h a v e
announced p l a n s for d r i l l i n g , bu t no r e a l p rogress has yet been
made.
In t o t a l , t h e c r u d e o i l p r o d u c t i o n of t h e UAE r e a c h e d
i t s p e a k i n 1 9 7 7 , b u t s i n c e t h e n , o u t p u t has d e c l i n e d
s u b s t a n t i a l l y . As i n t h e o t h e r Gulf c o u n t r i e s , t h e UAE h a v e
t r i e d t o expand product ion of r e f ined products. (see Tab le 7).
B e f o r e 1 9 7 6 , t h e UAE had no r e f i n e r y c a p a c i t y
a v a i l a b l e . I n t h a t year Abu Dhabi opened i t s r e f i n e r y a t Umm a l -
Nar wi th a capac i ty of 15,000 b/d. Feedstock comes by p i p e l i n e
f rom Bab.
A s t he o r i g i n a l r e f i n e r y a t Umm al-Nar soon proved t o
b e i n s u f f i c i e n t , ADNOC took t h e d e c i s i o n t o b u i l d a second
r e f i n e r y a t t h e same p l a c e b u t w i t h a c a p a c i t y four t imes as
l a r g e (60,000 b /d ) , The new r e f i n e r y i s s c h e d u l e d t o come i n t o
o p e r a t i o n in 1985. In c o n n e c t i o n w i t h t h i s new r e f i n e r y , two
d e s a l i n a t i o n units w i l l be a v a i l a b l e a t a c o s t of Dh 105 m i l l i o n
(about $28 m i l 1 ion),
I n 1977 ADNOC announced t h a t an a d d i t i o n a l r e f i n e r y was
I t s i n i t i a l c a p a c i t y w a s s e t a t 120,000 t o be b u i l t a t Ruwais.
29
b / d , which became a v a i l a b l e i n 1981, t h e i n v e s t m e n t c o s t s were
$600 m i l l i o n . I n 1 9 8 2 , however , it was d e c i d e d t o expand t h i s
capac i ty by 45,000 b/d a t a c o s t of about $300 m i l l i o n .
The main products from the Umm al-Nar r e f i n e r y a r e gas
o i l , f u e l o i l a n d g a s o l i n e , w h i l e t h e R u w a i s r e f i n e r y
c o n c e n t r a t e s on f u e l o i l , g a s o i l , n a p h t h a , k e r o s e n e and
gas o l i n e . I n 1974, Kuwait and Abu Dhabi s i g n e d a c o n t r a c t t o
build a 100,000 b / d r e f i n e r y i n Ras al-Khaimah w i t h c r u d e o i l
d e l i v e r i e s coming from Kuwait.
N a t u r a l gas p l a y s a n i m p o r t a n t r o l e in t h e ene rgy
s e c t o r of t h e UAE. I n Abu Dhabi
t h e o n s h o r e f i e l d s of Asab, Bab and B u t t a s a a r e s u p p l i e d w i t h
t r e a t m e n t f a c i l i t i e s and connec ted t h r o u g h p i p e l i n e s t o t h e
Ruwais f r a c t i o n i n g p l a n t . T h i s p r o c e s s i n g and d i s t r i b u t i o n
s y s t e m ( t h e Gasco p r o j e c t ) was c o n s t r u c t e d i n 1977-81 a t a c o s t
of $2,120 m i l l i o n 3 . At c a p a c i t y t h e f r a c t i o n i n g p l a n t c a n
p r o d u c e 46,000 b /d of p ropane , 46,000 b/d of b u t a n e and 67,000
b/d of pentrane.
Most o f t h e gas i s a s s o c i a t e d .
A s s o c i a t e d g a s f rom t h e o f f s h o r e f i e l d s of Umm S h a i f ,
Upper Zakum and Lower Zakum i n c o m b i n a t i o n w i t h n o n - a s s o c i a t e d
gas (cap gas) from Uweinat and Thamama F w i l l p rovide 7 m i l l i o n
m3/day of i n p u t t o a n LNG p l a n t on Das I s l a n d , T h i s p l a n t came
i n t o ope ra t ion i n 1979, with the purpose of provid ing Japan w i t h
LNG and LPG.4 I n a s econd p h a s e , t h i s p l a n t w i l l be p r o v i d e d
w i t h s e v e n s t o r a g e t a n k s ( t h r e e for LNG and four f o r LPG) a t an
i n v e s t m e n t c o s t of a b o u t $570 m i l l i o n ( see MEED, 1 9 Augus t ,
1983).
30
I n Dubai , an LPG p l a n t h a s been in o p e r a t i o n s i n c e
1980
gas . Most of t h e g a s is used as f e e d s t o c k for t h e a luminium
p l a n t a t J e b e l A l i . The LPG p l a n t s imul taneous ly produces 11,000
b/d of propane, 7,000 b/d of butane and 7,000 b/d of condensates.
The i n v e s t m e n t c o s t f o r this LPG p l a n t w a s $400 m i l l i o n and i t
was f i n a n c e d t h r o u g h two E u r o l o a n s , one i n 1977 and a n o t h e r i n
1979, amounting t o $230 mil l i o n and $120 m i l l i o n r e s p e c t i v e l y
(see Arab O i l & Gas Direc tory , 1983, ~ 3 8 1 ) .
w i t h a p r o d u c t i o n c a p a c i t y of 1.5 m i l l i o n m 3 /day of d r y
I n Sharjah, t h e r e i s an ambitious p r o j e c t t o cons t ruc t
a gas p i p e l i n e from the Sajaa f i e l d t o an onshore p l a n t f o r t he
p r o d u c t i o n of 13,000 b / d of LPG, 7,500 b / d of p r o p a n e and 6,000
b / d o f b u t a n e ( s e e D i x o n 1 9 8 3 , p.23). The t o t a l c o s t i s
es t imated a t $300 m i l 1 ion.
S e v e r a l i m p o r t a n t i n v e s t m e n t s h a v e been made in t h e
t r a n s p o r t s e c t o r . I n 1977, i t was d e c i d e d t o b u i l d a 1 0 2 km
underwa te r p i p e l i n e be tween t h e o f f s h o r e Zakum f i e l d and Abu
Dhabi. The c o s t was est imated a t $20.5 m i l l i o n . Terminals have
been b u i l t a t J e b e l Dhama, Das I s l a n d , Abu al-Bukhoosh, Mubarraz,
Delrna I s l a n d ( f o r $750 m i l l i o n ) and a t Z i r k u I s l a n d ( f o r $600
m i l l i o n ) . Abu Dhabi has inves t ed i n s e v e r a l tankers . One 269,000
dwt tanker was cons t ruc ted i n 1975 ( a t a c o s t of $34.5 m i l l i o n ) ,
one 260,000 dwt t anker a l s o in 1975 and one 136,000 dwt tanker i n
1976. In a d d i t i o n t h e Abu Dhabi N a t i o n a l T a n k e r s Company h a s
ordered seven o the r petroleum product tankers.
I n t h e pe t rochemica l s e c t o r ADNOC has organised a j o i n t
31
ven tu re with Compagnie Franca ise des f e t r o l e s (CFP) t o cons t ruc t
a f e r t i l i s e r complex a t Ruwais. Associated gas w i l l be used a s
feeds tock i n order t o produce urea (1,500 tonneslday) and ammonia
(1,000 t o n n e s l d a y ) . The o u t p u t w i l l b e e x p o r t e d . The p l a n t is
a lmost ready f o r ope ra t ion and w i l l have requi red $200 m i l l i o n i n
investments.
A PVC p i p e p r o d u c t i o n p l a n t h a s been o p e r a t i n g a t
Masfah i n Southern Abu Dhabi s i n c e 1976.
Also in Abu Dhabi a f e r t i l i s e r p l a n t has been producing
u r e a (75,000 t o n n e s l y e a r ) and ammonia (300,000 t o n n e s l y e a r ) a t
Multan s i n c e 1979. Another f e r t i l i s e r p l a n t with an est imated
investment c o s t of $300 m i l l i o n i s c l o s e t o operat ion. It w i l l
a l s o p roduce u r e a (500,000 t o n n e s / g e a r ) and ammonia (330,000
tonnes lyear ) ,
I n Dubai , t h e world's l a r g e s t d r y dock came i n t o
ope ra t ion in 1979 a t a c o s t of $485 m i l l i o n . However, i t has been
of very l i t t l e use up t o t h e present t i m e (see The Economist, 19
February, 1983, p30).
In 1976, an aluminium smelter w a s cont rac ted i n Dubai.
I t s c a p a c i t y is i n t e n d e d t o b e 135,000 t o n n e s / y e a r . I n
connect ion wi th t h i s p l a n t t h e r e w i l l be a d e s a l i n a t i o n p l a n t and
a power s t a t i o n . The t o t a l c o s t o f t h e p r o j e c t i s e s t i m a t e d a t
more t h a n $1,000 m i l l i o n . I t i s f i n a n c e d by t h r e e d i f f e r e n t
l o a n s ( f o r $380 m i l l i o n , $230 m i l l i o n a n d $225 m i l l i o n
r e s p e c t i v e l y ) . Dubai dry g a s w i l l be used as a f e e d s t o c k and
t h e r e w i l l a l s o be a supply of gas from Abu Dhabi.
I n v e s t m e n t s i n t h e Un i t ed Arab Emira tes a re m a i n l y
concentrated i n r e f i n e r i e s , gas processing and gas d i s t r i b u t i o n
32
in Abu Dhabi .
organisations i s given in Table 8.
An overview of t y p e s of p l a n t s , d a t e s , c o s t s and
33
T h i s p r e s e n t a t i o n h a s been d e v o t e d t o p e t r o l e u m
investments in t he four "low-absorbing" OPEC coun t r i e s ; Kuwait,
Q a t a r , S a u d i A r a b i a and t h e U n i t e d Arab E m i r a t e s , for t h e ten
year per iod 1973-82. The r e s u l t s are as f o l l o w s :
U p t o 1 9 7 5 i n v e s t m e n t i n t h e p e t r o l e u m s e c t o r was
dominated by oil ext rac t ion . This is no longer the case, F i r s t ,
e x p e n d i t u r e i s c o n c e n t r a t e d on n o n - a s s o c i a t e d n a t u r a l g a s t o
o b t a i n a f e e d s t o c k f o r c e r t a i n b a s i c i n d u s t r i e s . Examples a r e
d e v e l o p m e n t of t h e Khuff f i e l d and t h e Nor th f i e l d i n Qatar.
Secondly, s u b s t a n t i a l c a p i t a l o u t l a y s are also d i r e c t e d to t he
u s e of a s s o c i a t e d gas . For example , t h e d e v e l o p m e n t of t h e
Master Gas System i n Saudi Arabia has generated o u t l a y s of about
$ 1 2 b i l l i o n . T h i r d l y , s i n c e a b o u t 1 9 8 0 a n n u a l c a p i t a l
e x p e n d i t u r e s f o r l i q u i f i e d n a t u r a l gas (LNG) h a v e been l a r g e r
than f o r o i l and gas e x t r a c t i o n toge ther , The annual o u t l a y s f o r
r e f i n e r y c o n s t r u c t i o n a r e also n o t f a r from t h i s amount ( s e e
F i g u r e 1).
T h i s r e c e n t and m a s s i v e c o n c e n t r a t i o n of c a p i t a l
e x p e n d i t u r e on n a t u r a l g a s a n d d o w n s t r e a m a c t i v i t i e s i s
u n d e r s t a n d a b l e in t h e s e c o u n t r i e s wh ich a t p r e s e n t a re l o s i n g
t h e i r marke t s h a r e s o f c r u d e oils, B u t i t s m a g n i t u d e ,
34
c o n c e n t r a t e d i n such a s h o r t t i m e p e r i o d , r a i s e s q u e s t i o n s
concerning t h e demand f o r r e f i n e r y products , petrochemicals and
LNG. Ref ine r i e s a r e being expanded s imul taneous ly i n Mina a l -
Ahmadi and Mina Abdul lah (Kuwait), i n Urn Said (Qatar) in J u b a i l ,
Yanbu and Rabigh (Saudi Arabia) and in Ruwais and Umm al-Mar (Abu
Dhabi). An e q u a l l y sho r t per iod of t i m e i s being devoted t o t h e
expansion of LNG capac i ty a t Ras Laffan (Qatar) and a t Das I s l a n d
(Abu D h a b i ) . P e t r o c h e m i c a l p l a n t s a r e b e i n g d e v e l o p e d
s i n u l t a n e o u s l y a t Shua iba (Kuwait) , a t Umm S a i d ( Q a t a r ) , a t
J u b a i l and Yanbu (Saudi Arabia) and a t Ruwais (Abu Dhabi).
T h i s b r i n g s us t o t h e c o n c l u s i o n t h a t Kuwait , Qatar,
S a u d i A r a b i a and t h e U n i t e d Arab E m i r a t e s h a v e s i m u l t a n e o u s l y
chosen to e n t e r o n a l a r g e s c a l e t h e m a r k e t s f o r r e f i n e r y
products , f o r 1 iqui f ied n a t u r a l gas , and f o r petrochemicals. It
is obvious t h a t t hese coun t r i e s w i l l f a c e s t r o n g competi t ion w i t h
e x i s t i n g producers. However, t he s t r o n g e s t compet i t ion w i l l be
be tween t h e four c o u n t r i e s t h e m s e l v e s . To some e x t e n t such
t e n s i o n s have been e l imina ted through j o i n t v e n t u r e s wi th Western
f i rms, where e x i s t i n g market channels can be used, Examples are
t h e involvement of She1 1 and Mobil O i l i n Saudi r e f i ne r ies and
w i t h B r i t i s h P e t r o l e u m i n t h e Nor th F i e l d g a s e x t r a c t i o n i n
Qatar. Such t e n s i o n s h a v e a l s o been r e d u c e d t h r o u g h d i r e c t
investment i n f o r e i g n petroleum f irrns w i t h an e x i s t i n g capaci ty
t o d i s t r i b u t e and s e l l t h e s e p r o d u c t s , The most i n t e r e s t i n g
example i s Kuwait’s t a k e o v e r of Gulf’s d i s t r i b u t i o n ne twork in
Northern Europe.
The c o n c l u s i o n of t h i s a n a l y s i s i s t h a t t h e r e is a
s t rong need t o i n v e s t i g a t e f u r t h e r t he i n d u s t r i a l o rgan i sa t ion of
35
t h e petroleum s e c t o r and r e l a t e d a c t i v i t i e s . S p e c i a l a t t e n t i o n
should then be g i v e n t o the comparative advantage or disadvantage
of t h e Gulf c o u n t r i e s i n t h e p r o d u c t i o n , t r a n s p o r t a t i o n and
marketing of o i l products.
A systems approach i s necessary to carry out t h i s task.
Re f ine r i e s and petrochemical p l a n t s are so interdependent t h a t i t
i s o f t e n i m p o s s i b l e t o s t u d y p r o d u c t i o n s e p a r a t e l y . The same
i n t e r d e p e n d e n c y c o n c e r n s t h e e x t r a c t ion of o i l and a s s o c i a t e d
gas. Production c o s t s and sales p r i c e s have t o be ana lysed f o r
d i f f e r e n t conf igu ra t ions of p l a n t s . Costs of t r a n s p o r t a t i o n must
be compared i n order t o d i s c o v e r t h e c o m p a r a t i v e a d v a n t a g e of
each new p l a n t i n d i f f e r e n t markets.
The investment programme c a r r i e d out by t h e four Gulf
coun t r i e s ove r t h e per iod 1973-82 is outs tanding i n modern times.
It would be extremely i n t e r e s t i n g t o ana lyse what e f f e c t it has
had and w i l l have on t h e i n d u s t r i a l o rgan i sa t ion of t h e petroleum
sector . P ro jec t e v a l u a t i o n procedures must be c e n t r a l t o such a
8 tudy .
36
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1. In p a r a l l e l w i t h t h i s development, KPC has taken over Gulf O i l ' s r e f i n e r i e s and d i s t r i b u t i o n ne twork i n Belg ium, t h e Nether lands, Luxemburg and Scandinavia. At a cos t of about $150m R P C g o t a c c e s s t o a 75,000 b / d r e f i n e r y and t h e Europort l ube p l a n t i n the Netherlands (see MEED, May 1983 p9).
2. T h e p r e r e q u i s i t e f o r t h i s b e h a v i o u r h a s b e e n t h e s imultaneous d e c l i n e i n output from Abu Dhabi.
3 , Out of t h i s amount $ 1 , 6 9 4 m i l l i o n was f i n a n c e d by t h e Abu Dhabi Investment Authority.
4. There have been s e v e r a l inc,idents a t t h i s opera t ion caused by poor q u a l i t y equipment ( see McKechnie 1983 ~174).
45
Arab O i l and Gas Directory (1983): The Arab Petroleum Research Centre, Arab O i l and G a s D i rec to ry , Paris.
B a i l e y , R. (1981): "Countdown Begins f o r J e d d a h A i r p o r t , " MEED, 17 A p r i l .
B e r g e n d a h l , G. (1984); "The Management of OPEC's F i n a n c i a l Surpluses", Oxford I n s t i t u t e f o r Energy S tud ie s , Working Paper, F2.
C a n t r e l l , A. (1984): "Ref ine r i e s -Wor l d w i d e Construction", & Gas J o u r n a l Report, A p r i l 23.
C e n t r a l Bank of Kuwait ( u n d a t e d ) : The K u w a i t i Economy i n Ten Years. Economic Report f o r t h e Period 1969-1979, Kuwait.
C h a s e M a n h a t t a n ( 1 9 8 1 ) : C a p i t a l I n v e s t m e n t s o f t h e World Petroleum Indus t ry 1981, New York.
Dixon, A. ( 1 983) : "DPC Makes L i g h t of Off s h o r e D i f f i c u l t ies" , -? HEED 28 January.
Dixon, A. (1983): "Sharja F u e l s Revenues wi th Gas", MEED, 8 July.
Eckstein, 0. (1961): Water Resource Development, Cambridge, Mass.
The Economis t (1983): " I n h e r i t a n c e - A S u r v e y of Economic Development i n t h e Arabian P e n i n s u l a " , The Economis t , F e b r u a r y 19 .
Harvey , N. (1984): "What F u t u r e €or Arab R e f i n e r i e s " , MEED, 3 February.
Kingdom of Saudi Arabia (1982): Saudi Arabia - Achievements of t h e F i r s t and Second Development F l a n s 1390-1400 (1970-1980), Min i s t ry of Planning, Riyadh.
PicKechnie, G. (1983): " O i l and Gas F i e l d Development Finance'' i n Energy Finance by McKechnie, G. (edit .) , Euromoney F'ubl. London.
El M a l l a k h , R. (1979): Qa ta r : Deve lopmen t of an O i l Economy, Croorn H e l m , London.
MEED (1983); "KPC Heads Downstream f o r S t a b i l i t y " , MEED S p e c i a l Report, May.
MEED (1983): "UAE: Adagas Loan R e f l e c t s Banking Confidence", MEED, 19 August.
MEED (1983): "The Last of t h e Megaprojects", MEED, 9 September.
46
MEED (1983): "Petrochemicals-Dynamo or Drain", MEED, 21 October.
MEED (1983): "Domestic Heavy I n d u s t r y P r o j e c t s " , HEED S p e c i a l Report November.
OAPEC (1983): Ninth Annual S t a t i s t i c a l Report 1980-81, Kuwait.
OAPEC (1984): Tenth Annual S t a t i s t i c a l Report 1981-82, Kuwait.
OPEC B u l l e t i n : O i l Market Review, 1982-84 ( v a r i o u s issues) .
O'Sul l i v a n , E. (1980): "Saud i s Modify F l o w of Water C o n t r a c t s " , MEED, 7 March.
O t a q u i , S. (1983): "Kuwait's Economy D e f i e s C r a s h and Crisis," MEED, 26 August.
P e t r i e - R i t c h i e , S. (1982): " D e c i s i o n D a y Approaches f o r Qatar 's North F i e l d Gas Development", MEED, 20 August.
P e t r i e - R i t c h i e , M. (1983): "When the Spending Had t o S top ," MEED Spec ia l Report, August.
47
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