Quality Energy to build $13b refinery

Quality Energy to build $13b refinery
Bloomberg Published: February 05, 2008, 23:41

Abu Dhabi: Quality Energy Petro Holding International, which is owned by a member of Abu Dhabi's Al Otaiba family, plans to build a $13 billion oil refinery in the UAE and seek Iranian crude as feedstock.

Quality Energy will construct the 500,000-barrel-a-day plant with the government of Russia's Chel-yabinsk region, in which the company plans to invest $100 billion between now and 2012, according to chairman Adil Al Otaiba.

"The Chelyabinsk government is negotiating with the Iranian government to provide the crude for the UAE refinery," Al Otaiba said.

Quality Energy is in talks with the rulers of one of the UAE's northern emirates about building the plant, he said, without giving a date for the start of construction.

Iran has made several overtures in recent months to pursue joint ventures with other countries, including Russia, amid international sanctions over its nuclear programme.

The nation's foreign minister said on December 13 that Iran and Russia would collaborate to develop gas deposits.

The UAE already has a gas-supply contract with Iran signed by Sharjah-based Crescent Petroleum. The fuel has been delayed since November 2005 while Iran, holder of the world's second-largest gas reserves after Russia, demands a higher price.

Quality Energy will start building a $4.5 billion refinery in Chelyabinsk in 2009, once the region's government concludes talks with oil companies including Itera Holding, Rosneft Oil and Lukoil to secure one million tonnes of crude a month.

"The Russian government will guarantee crude supplies to the refinery for 15 years," Al Otaiba said.

The 180,000-barrel-a-day plant, slated for completion in 2012, will be fully funded by Quality, which has already secured a loan for 70 per cent of the total amount.

The Chelyabinsk government will supply the crude in return for a 25 per cent stake in the refinery, Al Otaiba said.