The short answer to this is: very. Downstream expansion has become a very pertinent topic, especially for national oil companies increasingly aware of the benefits of focusing on turning oil into refined fuels and petrochemicals in Abu Dhabi. The downstream industry in this part of the world is not only ambitious but also globally recognised as such.
The growth of the downstream industry as a whole
Over the past 8 - 10 years the downstream industry – i.e. petroleum products distributors, oil refineries, petrochemical plants, retail outlets and natural gas distribution companies - has grown substantially. Many other countries in this part of the world have already set up ambitious infrastructure to capitalise on local resources and global demand.
Saudi Arabia, for example, invested significantly in the expansion of its downstream oil and gas facilities and the building of new plants. Once regarded as the “poor cousin” of upstream activities, downstream has emerged “thriving from the doldrums of a decade ago,” according to Forbes.
The downstream industry in Abu Dhabi
There are plans to invest up to $45 billion in developing downstream over the next five years in Abu Dhabi, with the country having clear intentions of becoming one of the world’s leading players in the downstream market, and Abu Dhabi has the resources and the partnerships to make that happen.
The United Arab Emirates has around 6% of the world’s supply of crude oil and has traditionally been a dominant upstream player but the focus on downstream is a reflection of the way that other countries are responding to changes in the market.
Why invest in downstream?
Executives from ADNOC, Abu Dhabi’s national oil company have been quoted as saying that one of the main reasons for the company to begin investing in downstream is to “stretch the dollar further from every barrel we produce.” It’s also worth noting that there is a more general desire in the industry to establish dominance in growth markets such as Asia, where oil use is forecast to rise by 8.6 million barrels per day. And then there is the potential impact of a drop in the demand for transport fuels from new initiatives designed to promote clean cars and more efficient living.
Petrochemicals could be the only growing sector remaining. Abu Dhabi is not the only country currently displaying ambitions for downstream - in Saudi Arabia for example, there is already collaboration on a $20 billion, “crude-to-chemicals” plant at Yanbu,’ which is designed to make refining petrochemicals more efficient. Iran and Egypt have also made moves in the same direction.
It’s fair to say that the downstream industry in Abu Dhabi is ambitious and ready to grow. With the investment and focus being poured into the sector it looks like it’s set to thrive. Stay in touch with the latest news by following the Euro Petroleum Consultants’ blog.