Abu Dhabi National Oil Company (ADNOC) plans to cut its exports of fuel oil in 2019, which the market sees as a refinery, which will boost the scarcity of global supplies of oil products, three trading sources said on Monday.

 

Initial oil fuel exports, the remaining oil after the initial refining process, will stop next year as ADNOC approaches the completion of repair work at the 127,000 barrels per day (bpd) refractive fluid refrigeration unit at Ruwais Refinery, which processes primary fuel oil to high value products such as Gasoline and diesel.

 

ADNOC shut down the liquid cracking unit after a fire at a petrochemical plant linked to the unit in January 2017. The Ruwais unit can handle 800,000 barrels per day of crude.

 

The unexpected interruption of the oil cracking unit ADNOC has stimulated the export of excess production of primary fuel oil.

 

ADNOC said in October it expected completion of the refurbishment of the unit by the end of this year.

 

Commercial sources said that in 2017 ADNOC exported about four or five shipments of 90,000 tonnes of crude oil from Ruwais on a monthly basis but in 2018 sold shipments through long-term supply agreements from January to December.

 

ADNOC has so far not responded to a request for comment.

The resumption of the operation of the refrigerated liquid cracker will remove up to 450,000 tons of feedstock from the market per month. Two sources said the loss of primary fuel oil supplies would affect the global balance but it would be difficult to measure its short-term impact on the market.

 

"The liquor market will definitely be hit," said one source, a Singapore fuel oil trader.

 

"The demand for primary fuel oil does not seem to be in good shape because of the strength of the price difference," said the trader, who declined to be identified because he was not authorized to speak to the media.

 

The higher the price of fuel oil crackers compared to crude oil, the less attractive it is that refineries will process fuel oil to produce higher fuel products.

 

One source said ADNOC's mid-sulfur fuel oil, typically two shipments or three shipments of 45,000 tons per month, could also fall after ADNOC ran the pilot operation of an anodized coal unit in Ruwais in September. The unit separates the fuel oil into gasoline and diesel.