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Jasem Ali Al-Sayegh

UAE, ABU DHABI - Energy & Mining

Everything’s Refine

CEO, Takreer

Bio

Jasem Ali Al-Sayegh is a chemical engineer and graduate of the University of Washington. He began working for the Abu Dhabi National Oil Company (ADNOC) in 1986. He managed both Abu Dhabi and Ruwais Refineries after the establishment of Takreer in 1999 to take over the refining business of ADNOC. In 2003, he became a member of the Takreer General Management Team before being appointed as General Manager of the company in 2006. He is now the CEO of Takreer. He is currently supervising the $10 billion expansion of the Ruwais refinery; a mega project that aims to double the quantity and improve the quality of the company’s refined products.

"We always benchmark ourselves with other refineries, mainly with Singapore or Rotterdam."

The $10 billion Ruwais Refinery Expansion (RRE) will be the largest in the region. How important is a site of this size to energy security in the UAE?

The project was planned and developed to serve three main objectives. The first objective is to meet the expected growth in local demand, especially in gasoline, and also to provide feedstock for the planned downstream petrochemicals industry, mainly by increasing the production of naphtha. The second objective is to maintain the presence of Abu Dhabi National Oil Company (ADNOC) in the international market for refined products. As the country grows, local demand rises, and this reduces the export quantities of refined products. Once the project is commissioned, ADNOC’s presence in the international market for refined products will be retained as export quantities increase. The third objective is to integrate the refining industry with the petrochemicals industry. This is extremely important because both the refinery and the petrochemicals businesses have been expanding, and ADNOC decided that this should be done in an integrated manner to optimize costs. Thus, the RRE and Borouge 3 were designed in an integrated manner from the start. We will be exporting propylene and importing hydrogen and this will reduce capital expenditure and operating costs for both companies.

How will the project contribute to the government’s target of being petrol self-sufficient by the end of 2013?

After we commission the project, we will be self-sufficient in gasoline and will also have extra capacity for the next 10 years. Having said that, there are also other initiatives taking place in Abu Dhabi, such as promoting compressed natural gas (CNG) as a transportation fuel, especially for the public sector. The aim is to reduce our reliance on oil and gasoline, mainly from an environmental perspective as CNG is cleaner.

“We always benchmark ourselves with other refineries, mainly with Singapore or Rotterdam.”

What other plans does Takreer have in the short to medium term to expand its downstream operations?

All of our plans for the refining industry have been fulfilled. Now, we’re consolidating and making sure that our investments are providing the right results. The last project that Takreer awarded was the Carbon Black & Delayed Coker Project, a heavy oil conversion project. It is in the detailed engineering stage and construction will start soon. The project will convert all of the heavy oil generated by both refineries, as well as the new refinery, into lighter products and specialty products such as carbon black, which will be used by Borouge, and calcined coke, which will be used by local aluminum firms such as EMAL. That project will ensure that the two plants become full-conversion refineries, and it will bring our refinery to a high level of capacity and complexity, which means we will have highly profitable operations once the project is commissioned.

Given fluctuating crude prices, what are the challenges for companies such as Takreer to enforce cost-control measures while also ensuring state-of-the-art technology is available?

Cost-control measures are extremely important in terms of ensuring that we have an efficient operation. We always benchmark ourselves with other refineries, mainly with Singapore or Rotterdam. We avail of Solomon Associates, which is a well-known benchmark agency for the refining industry. We use best practices and the findings of benchmark studies to make sure that our costs are managed properly. However, we recognize that there are always fluctuations in crude and product prices, and that any sharp increases or decreases can affect our margins positively or negatively. This could annul the cost-control measures adopted by companies. Therefore, we thoroughly study how we’re going to apply any cost control measure. We never cut corners on safety and maintenance, which are crucial for us. These are things that we will never compromise.

What are some of the challenges companies like Takreer face in today’s rapidly changing market?

In the wake of the global financial crisis, all of the refineries are facing difficulties, especially old and less-complex refineries, many of which are running below capacity or closing down. We’ve taken actions with our new projects that will increase our capacity and complexity to ensure that our margins are always at least positive. Another challenge is cyber security, and many companies are working to secure first their operations followed by other systems such as finance and human resources.

How does growth in the northern Emirates contribute to the increase in local demand, and what increases have you seen in the international market?

For us, the northern Emirates were always in ADNOC’s forecast planning. The growth there is also being taken into consideration. We are building a terminal for ADNOC Distribution at Hamriya Free Zone to cater to the growth there. It will distribute our products directly in Sharjah and the northern Emirates. With this new terminal, we can ship refined products in bulk from Ruwais Refinery and unload and distribute them to customers. It is logistically much easier this way. Regarding the international market, growth is mostly seen in the East—mainly China and India, as well as the Middle East to a certain extent. However, demand for refined products has declined in the US, Europe, and Japan due to the financial crisis that hit those markets.

The US has increased its refining capacity, reducing its reliance on Nigerian and Algerian oil. What effect do you think growing US oil production will have on the UAE?

This is in regard to shale oil and gas mainly, which indirectly affects the refining business. Shale oil is produced through a very intensive process of hydraulic fracturing known as fracking, which separates the oil from the shale rocks. This is mostly taking place in the US and will affect heavy oil producers. However, we believe the demand in energy will continue to increase, despite the economic slowdown. Oil prices are still above $100 a barrel. Shale oil will boom, but it will reach a peak soon, before probably being abandoned. Fracking requires a lot of water and the treatment of this water is also an issue. Shale gas provides a cheap source for the petrochemical industry. It will affect the petrochemicals industry that uses naphtha, a refined product, as feedstock. This can adversely affect the refining industry if the US allows producers to export shale gas abroad.

The UAE government has declared 2013 the Year of Emiratization. What is Takreer doing to explore employment opportunities for the national workforce?

We’re in line with this strategy and support it 100%. Our main need is for engineers and technicians. In engineering, we depend on ADNOC Petroleum Institute and local universities, and it’s an area where we always see a shortage. We are also working to attract those with secondary education and develop them into technicians, mechanics, electricians, and operators. We have a genuine need for these workers in this industry. ADNOC’s target to achieve 75% Emiratization by 2017 is challenging, but we have confidence that we will achieve it. Currently, we have realized 35%.

How challenging is it to recruit talented international staff, considering the high level of competition in this industry throughout the region?

It is a challenge, and this was proven when we started the recruitment process for our new refinery. There are big expansion projects taking place simultaneously in Saudi Arabia, Qatar, and Oman. We are doing our best to attract high-caliber employees. The UAE, being an attractive and safe destination for many, is supporting our recruitment of foreign manpower. We also realize the importance of offering attractive employment packages.

© The Business Year – August 2013

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