Abu Dhabi National Oil Company (Adnoc) plans to double production of sulphur in the coming decade on the back of growing demand in local and foreign markets, a senior official said.
It is also targeting new markets in Africa, Asia, South America and Australia.
“Today, we produce 6 million tonnes of sulphur per year but over the coming decade we expect this number to almost double,” said Omar Suwaina Al Suwaidi, gas management director at Adnoc while speaking at the Middle East Sulphur conference.
He said they are trying to increase the volume of sulphur produced from the existing and upcoming sour gas processing facilities to meet the growing local energy needs and those of Adnoc’s international customers.
“Not only will this further cement our position as the number one sulphur exporter, it will also make us the largest producer of sulphur in the world,” he added.
The company is also planning to enter into partnerships in markets importing its sulphur to manufacture phosphate based fertilisers in Africa, Asia, South America and Australia.
“Our partners will enjoy a reliable supply of competitively priced sulphur, backed by robust infrastructure and logistical networks. This will enable Adnoc to easily respond to market conditions, quickly and efficiently.”
Adnoc believes sulphur is a commercially viable commodity that offers the company opportunities to create added value from its resources and improve margins.
“In the lower for longer oil price environment, it is imperative to effectively manage costs and seize value opportunities where they arise,” Al Suwaidi said. “It is about unlocking the full potential of every single asset and maximising returns for Abu Dhabi, Adnoc and the nation.
A by-product of oil and gas industry, sulphur is widely used in agriculture as a fertiliser and also in the construction and in the industrial sector.
In the UAE, sulphur is produced at Habshan and Shah fields in the western region of Abu Dhabi. Adnoc is planning to expand the Shah gasfield to increase the sour gas processing by fifty per cent of the existing capacity of one billion cubic feet per day.
Al Suwaidi said the expansion of sulphur processing capabilities opens up new business possibilities for Adnoc to capitalise on.
“In addition to expanding our exports of sulphur we will support the development of a local sulphur products industry. This will not only generate additional revenue, it will also contribute to the UAE’s strategic objective of diversifying the nation’s economy.”
According to Dr Peter Harrison, a sulphur expert, the UAE is expected to become the biggest exporter of sulphur in the world by 2020.
“According to current forecasts, the UAE will continue to see supply growth throughout the next year with the region becoming an increasingly important origin for sulphur supply in the global market.”
The total production of sulphur in the world is estimated to be about sixty million tonnes, Dr Harrison said at the conference.
Kuwait is sticking with plans to add half a million barrels a day of oil-production capacity as it prepares for the eventual expiration of the output quotas OPEC adopted to help drain a global oversupply, the head of Kuwait Oil Co. said.
State-run KOC plans to raise the Gulf nation’s capacity from its current level of 3.15 million barrels a day, Chief Executive Officer Jamal Jaafar said in an interview in Kuwait City. The company, which is responsible for most of Kuwait’s domestic crude production, will add capacity even if the Organization of Petroleum Exporting Countries decides to extend the supply cuts beyond June, he said.
“We will continue to increase production capacity because we have a five-year plan to reach 3.65 million barrels a day by 2021, so we can’t stop investing in that,” Jaafar said on Wednesday. “We will take advantage of the OPEC-cut deal to perform maintenance on facilities in the fields.”
OPEC agreed in November to reverse its strategy of pumping without limits to defend its market share against increased supplies, including oil from U.S. shale deposits. The group won pledges from Russia and other producers to contribute, targeting collective cuts of 1.8 million barrels a day for six months starting in January. Benchmark Brent crude, which traded at more than $115 a barrel in June 2014, has stemmed losses since the deal was announced and was trading down 37 cents at $55.60 in London at 1:21 p.m local time.
“KOC is producing 2.7 million barrels a day now, and we will maintain this under the deal,” Jaafar said. “At the moment we have the capacity to reach 3.15 million barrels a day, but we will stick to the OPEC agreement.”
KOC has signed three service agreements with Royal Dutch Shell Plc and another with BP Plc to develop exploration and production projects, he said. The company plans to drill its first offshore exploration wells by year-end, including wells near Failaka Island in the Persian Gulf, Jaafar said. Kuwait is OPEC’s fifth-largest producer.
The company plans to shut facilities and oil fields in the east and south of the country for maintenance, while northern fields will remain open because they produce a higher-quality crude that can be used for blends that are exported, he said.
OPEC ministers will meet in May to assess the market and decide if they should extend their output cuts into the second half of the year. The group is 92 percent compliant with its pledge to reduce output by 1.2 million barrels a day, Kuwaiti Oil Minister Essam Al-Marzooq told reporters on Monday in Kuwait City. Non-OPEC producers are complying at a lower rate of more than 50 percent, Al-Marzooq said.
Kuwait’s state company for investing in oil production outside the country has boosted output after spending $900 million on a project in Thailand and an additional $300 million on a deal in Norway, Nawaf Saud Al Sabah, CEO of Kuwait Foreign Petroleum Exploration Co., told reporters on Wednesday. Both projects are providing a “very good’ return on investment, Al Sabah said, without elaborating.
Kuwait Foreign Petroleum Exploration plans further acquisitions, including in the Middle East, as the drop in crude prices in the last few years makes such deals more attractive, he said.