Adipec 2016: Cepsa makes case for part in Borouge petrochemicals expansion

Alyazia Al Kuwaiti, right, the director of upstream and midstream at Ipic, and the Cepsa chief executive Pedro Miró, speak at Adipec. Mona Al Marzooqi / The National

Cepsa, an integrated oil company wholly owned by Abu Dhabi’s International Petroleum Investment Company (Ipic), will pitch to be part of the next phase of expansion at the emirate’s huge Borouge petrochemicals complex in Al Gharbia region, says its chief executive.

Pedro Miró said the Mad­rid-based company wants to join Abu Dhabi’s development plans to take advantage of its market-leading position in detergent-related petrochemicals, which it has yet to sell extensively in Asia.

Speaking while attending the annual Abu Dhabi International Petroleum Exhibition and Conference (Adipec), he said that he would be “extremely pleased” if Borouge decided to go with Cepsa.

“We are ready from yesterday,” the Cepsa chief said.

“Cepsa accounts for between 15 and 20 per cent of this active ingredient [which goes in detergent products] around the world, with a leading position in Europe, North America, South America and Africa.

But I would say very small, almost nothing in Asia, so I think we have a clear opportunity. If we don’t do this somebody else will,” he said.

Cepsa has the technology and the soon to be merged Ipic/Mubadala group has the capital and will determine the investment, while Abu Dhabi National Oil Company has the oil by-product feedstock – and is 60 per cent owner of the Borouge facility and full owner of the adjacent Ruwais refinery.

Cepsa has budget discussions tomorrow with Ipic’s directors, including Alyazia Kuwaiti, the director of upstream and midstream, who said talks about the structure of the merged energy group were well advanced but not yet decided.

“How I perceive the merger [of Ipic and Mubadala] is bringing the right hand of Abu Dhabi together to work with the left hand of Abu Dhabi, as simple as that,” Ms Kuwaiti said.

“There are very easy synergies that can be achieved, where we can centralise functions, save costs and improve efficiencies. What’s the point of having two offices running assets in the same area for the same shareholder? It makes no sense.”

But she said while the broad vision for the energy platform is taking shape – and it focuses heavily on petrochemicals expansion – investment decisions are still a way off.

The two entities announced in July their intention to become one company with about US$125 billion of assets, a large portion of which will be their combined energy portfolio, including Cepsa, which reported net income last year of about €600 million (Dh2.44bn).

While the core interests in this sector are in plastics-related industries, led by Austria-based Borealis, which is a 40 per cent shareholder in Borouge, Cepsa also is one of the world’s biggest producers of petrochemicals that are a precursor for detergent products, for example linear alkylbenzene (LAB).

Borouge has expanded rapidly since its inception in the late 1990s, with the $4bn phase three expansion completed last year and more than doubling production to 4.5m tonnes per annum.

The expansion so far has been based on gas – ethane – but the next phases of expansion are expected to be based on use of naphtha, a by-product of the oil refined at the adjacent Ruwais refinery, which itself doubled production last year to 900,000 barrels per day.

The naphtha feedstock leads to a different slate of petrochemicals, including the detergent ingredients Cepsa specialises in.

Mr Miro said: “We would prefer to be part of expansion phase four, because if it is five we have to wait.”

Follow The National's Business section on Twitter

__________________________________

ABU DHABI OIL, Adipec 2016: The National's full coverage

”Adipec”

■ Total backs Adnoc on production increases at Bab onshore field

■ Opec's Barkindo says Russia is "on board" for a deal to curb output

■ Dearth of energy investment could trigger soaring oil prices, says UAE Energy Minister

■ Central bank policies may be a roadblock to oil investment, says Yergin

■ Saudi market grows in importance for ABB

__________________________________