UAE - DUBAI: Petrochemical sector

The chemical sector in Dubai is 13 years old, having started off with a small acetylene and calcium carbide plant in 1985. It was located at Jebel Ali which

had been established as a free zone in 1980 (see below). Since then Jebel Ali has become the centre for Dubai's chemical and petrochemical industries. Now the free zone has the capability to produce MTBE, polymer resins, liquid industrial chemicals, polystyrene, etc. Dubai could become a significant source of petrochemicals if the planned $2 billion complex proposed by BASF materialises. While the local government has approved the project, there has been no momentum since early 1997. As envisaged, the Dubai government would have a 40% stake in the venture while BASF would hold 60%, or the latter may sell part of its equity to another company. Under the proposal, the plant should be completed by 2002. The biggest venture in this sector in Jebel Ali is the 500,000 t/y MTBE complex which came on stream in May 1995. It was officially inaugurated nearly two years later, on March 30, 1997. The project is a joint venture between Dubai Gas Co. (Dugas) and Scimitar Oils of Canada. All of its output is exported to North America under term contracts. The plant has been operating at full capacity since it came on stream, except during a scheduled maintenance shutdown in January-February 1997. Built at a cost of $250 million, work on the MTBE complex started in September 1993. Colt Engineering of Canada did the basic designs, while ABB Lummus Crest of the US provided detailed engineering and the process technology. Lummus butane isomerisation, CATOFIN dehydrogenation and CDMtbe synthesis technologies are used to convert a mixed butane feedstock into MTBE. ABB Lummus Crest also provided procurement services for the CATOFIN unit and is operating the training programme for the entire complex. In May 1993, a $12- million contract was awarded to the Italian-Saudi company Belleli Saudi Heavy Industries for the erection of two 150,000 barrel storage spheres and four tanks with capacities of 150,000 to 375,000 barrels at the site. The project was financed fully by Dugas. In addition to the MTBE project, several other chemical production, storage and distribution ventures were launched in Jebel Ali in 1995. These include: - A 10,000 b/d plant built by Jotun Polymer to produce unsaturated polyester resin. On stream since February 1995, the plant is said to be the first outside Europe for the Norwegian company. - A plant to produce 600 tons/month of polystyrene sheets and 300 tons/month of polypropylene sheets was set up by Middle East Packaging, with an Indian businessman behind the project. The plant is located next to an existing plant of the company which produces polystyrene cups and containers for juices and dairy products. This plant's capacity has also been expanded. - The first phase of a liquid industrial chemical storage facility was completed in the second half of 1995 by All Industrial Chemicals Group Ltd. of Canada. The facility includes four tanks with a total capacity of 2,600 tons to store liquid chemicals used in the production of detergents. The second phase was to involve additional storage tanks and a warehouse for solid chemicals and possibly a facility to produce packaging for solid chemicals. Eventually storage capacity was planned to rise to 5,800 tons. - A regional sales and distribution centre was set up in 1995 by Petrochem UK in partnership with Indian businessman Yogesh Mehta, to be called Petrochem

Middle East FZE. It markets a range of petrochemical solvents, such as alcohols, keytones, ethanol amines, esters, monomers, inorganic powders, glycol ethers, hydrocarbons and specialty chemicals used in a range of industries. Markets range from the GCC to Iran, India and the Central Asian countries which were part of the former Soviet Union. Background: The first chemical venture in Jebel Ali was an acetylene and calcium carbide plant which started up in 1985 as a JV between SZP Zavarivac of former Yugoslavia and Issa Oman Bin Haydar General Trading Establishment. Then there was a five-year break, until a plant producing 6,000 t/y of water- soluble compound fertilisers, the emirate's first fertiliser venture, came on stream in the second quarter of 1990. It was built by Union Kemira Co., a JV between the UAE's Union Agricultural Company and the Finnish chemical and fertiliser group Kemira. An aromatics facility producing benzene, toluene and xylene for export, came on stream at the end of 1990. It was built by Dubai Chemical Co. at a cost of $60 million. A 10,000 t/y latex plant operated by Union Carbide Chemicals and Plastics of the US started up at end-1991. There had been proposals for a phosphoric acid plant to be built by Mangalore Chemicals & Fertilisers of India. A fertiliser plant is to be launched in Jebel Ali in the coming years as well. This $160m project is being implemented by Southern Petrochemical Industries Corp. (SPIC) of India, the local Emirates Trading Agency (ETA) and the Detroit-based MCN Investment Company. The project involves dismantling a fertiliser plant in Sri Lanka and shipping it to Jebel Ali where it will be re-assembled. The plant, which currently has a capacity of 940 tons/day, will be upgraded to 1,200 tons/day, with process technology to be provided by MW Kellogg of the US and Stamicarbon of the Netherlands. The plant will consume 35m cubic feet/day of gas, but if gas is not available the venture has the option of using naphtha as feedstock. The plant is scheduled to start up operations in early 1999, and its entire output will be exported to India. The company to operate the plant in Jebel Ali is called SPIC Fertilisers & Chemicals FZE. It has appointed Hong Kong & Shanghai Banking Corp. (HSBC) as the financial advisor. HSBC will arrange and structure $96m in financing, while the remaining $64m will be provided in the form of equity by the shareholders. The chemicals sector in the other emirates is limited in comparison to that of Dubai. There have been proposals for projects in recent years, but these have yet to materialise. Prominent among projects proposed in Sharjah is a methanol venture promoted by Mobil, in partnership with JGC and Nissho Iwai of Japan. If it is built, the methanol project could turn the emirate into a major supplier for the region. The proposed plant is to have a capacity of 800,000 t/y. The output would be sold as feedstock to Qatar's planned MTBE plant. Dubai might also be a possible buyer, as it has no intention at this point of building a methanol plant to supply its existing MTBE complex.