State-owned Abu Dhabi National Oil Co (ADNOC) is expected to start production from its newly expanded Ruwais refinery in the second half of November, on track to meet initial targets, industry sources said.
"Production will start in the second half of November but I'm not too sure when the first oil product will be offered from the refinery," said one of the sources close to the matter.
"It takes time to stabilise production of new units."
ADNOC's chief executive said earlier this year that the Ruwais refinery expansion will be fully commissioned by the end of 2014.
The expansion is expected to more than double the capacity of the refinery from 415,000 barrels-per-day (bpd) and will process Abu Dhabi's Murban crude oil grade.
Once fully commissioned, the expanded refinery is expected to produce an additional 8 million tonnes a year of diesel and 4 million tonnes a year of jet fuel. The refinery currently produces 5 million tonnes a year of diesel and 6 million tonnes a year of jet fuel.
TERM CONTRACTS
ADNOC will not be offering term exports of diesel outside the local market until production is stable at the expanded Ruwais refinery, the first source said.
"With an additional 8 million tonnes a year of diesel, offering term supply makes sense, but the production needs to be stabilised first," the source added.
For now, it is negotiating with local fuel retailers Emirates National Oil Co (ENOC) and Emirates General Petroleum Corp (Emarat) to supply unspecified volumes of diesel with 10 parts per million (ppm) sulphur for 2015, industry sources said.
ADNOC switched its term contracts with ENOC and Emarat earlier this year after the UAE government raised its fuel standards.
The majority of supply from the expanded Ruwais refinery is expected to meet rising domestic demand, with the rest likely to be shipped to Europe, traders said.
ADNOC's distribution arm signed an agreement in 2012 to take over fuel stations run by Emarat.
"The additional volumes from the refinery at this stage are expected to go to local market. From January, they (ADNOC) will be supplying all seven emirates of the UAE, including Dubai," a Gulf-based trader said.
ADNOC has also begun term negotiations to supply jet fuel for 2015 with existing clients and is expected to offer similar volumes to this year's contract, traders said.
It is asking for $2.10 a barrel above Middle East quotes, they said, though discussions are still on.
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