Spain’s Cepsa, ADNOC budget $600m for Abu Dhabi’s LAB plant

LONDON (ICIS)–Cepsa and ADNOC aim to invest around $600m in their paraffins and linear alkyl benzene (LAB) plant in Abu Dhabi, the head of chemicals at the Spanish energy major said this week.

Jose Manuel Martinez, pictured right, disclosed the plant will have a production capacity of 150,000 tonnes/year.

Cepsa and Abu Dhabi’s state-owned energy major ADNOC announced on 15 November their intention to build the paraffins and LAB plant in Ruwais and integrate it with ADNOC’s nearby refinery.

“The idea is to contract basic engineering in January, which will take between eight and 10 months. By the time we finish the basic engineering, we’ll have a better idea about the final cost, but the numbers we are working with at the moment stand at around $600m,” Martinez told ICIS.

Each company would contribute equal parts as per the 50/50 joint venture agreement, the first project the two firms undertake together.

“At 150,00 tonnes/year [in production capacity, this] will be the largest LAB plant ever,” the Cepsa executive added.

LAB is used in the manufacture of biodegradable household and industrial detergents and is also used in house cleaners, fabric softeners and soap bars.

In April, the Spanish company announced a €64m revamp at its LAB plant in Brazil to bring production capacities to 260,000 tonnes/year, up from 220,000 tonnes/year. The plant is located at the firm’s petrochemical complex of Camacari in Salvador de Bahia.

Martinez said he did not fear overcapacities for LAB and said that Abu Dhabi’s LAB production would be mostly exported to the south and east Asia, where demand for the product is forecast to continue growing in coming decades, he said.

“Abu Dhabi is a perfect platform to grow in this part of the world and the plant has to be big. Operating rates [at LAB plants globally] stand at 80-85%, and there is no new announcement about LAB plants coming on stream in coming year, apart from a plant in Saudi Arabia,” said Martinez.

The executive was referring to Saudi state-owned Farabi Petrochemical Complex, which, in July, announced an expansion at its LAB facility in Yanbu, to come on stream in 2020 and add 120,000 tonnes/year of LAB capacity to the global market.

“LAB demand growth globally allows for a new plant every two years. Having said that, our LAB production is mainly located in the Atlantic Basin – we have plants in Spain, Canada and Brazil – but the real growth in coming decades will be in the Indian subcontinent and southeast Asia,” he said.

“I think that to cater for the new demand we need to be in this part of the world, and Abu Dhabi is the perfect place for this plant.”

Interview article by Jonathan Lopez

Picture source: Cepsa