ADNOC awards $1bn contract for Ruwais plant

The Adnoc subsidiary Borouge announces that it would tap Linde Group, a German firm, to supply the plant's centrepiece ethane cracker.

Abu Dhabi's plastics manufacturer will more than double its output after sealing a US$1 billion (Dh3.67bn) deal for an ethane cracker at its new plant in Ruwais. Abu Dhabi National Oil Company's (ADNOC) subsidiary Borouge announced yesterday that it had awarded Linde Group, a German firm, the contract to supply the plant's centrepiece for $1.09bn, offering firm evidence that the company will pursue its capacity expansion to 4.5 million tonnes a year by 2013 despite a falling market. The new plant - together with an expansion to 2 million tonnes that is still under way at its existing plant - will transform the company into a major player in Abu Dhabi's efforts to diversify its economy. Borouge, a joint venture between ADNOC and Borealis, an Austrian firm, took a year to decide on the future of the project before announcing a final investment decision in April. Yesterday's contract was concrete evidence that the expansion was going ahead, said Abdulaziz al Hajri, the chief executive at Borouge. "The awarding of this contract confirms Borouge's commitment to the Borouge 3 project, a major expansion of our production facility in Ruwais," he said. The petrochemical market has recovered little from its worst downturn in decades. Demand for products dropped sharply at the end of last year and in the first quarter of this, as a result of a fall in the world's output of cars and other consumer goods. Mr al Hajri has said he would pursue the company's expansion in spite of the current market conditions, betting that it will be completed just as demand recovers. Yesterday's contract for the third-stage expansion would be followed by contracts for plastics units and utilities at the plant site, he said. The cracker transforms ethane, an ingredient in natural gas, into ethylene through blasts of hot steam. Ethylene converts easily into the plastic polyethylene, or can be made into other plastic products. Linde, which has already built two crackers for Borouge, said the Abu Dhabi company had become the fastest-growing petrochemical firm in the world. Aldo Belloni, a member of the Linde board, said: "Nowhere else in the world has a petrochemical company installed so much olefins capacity in such a short time as Borouge is currently doing in Abu Dhabi." Linde's cracker will be constructed by Consolidated Contractors, a Greek firm that is regularly involved in ADNOC's construction contracts. Much of the new output will be marketed to China and East Asia, where Borouge is constructing three logistics centres with a view to targeting demand from the region's growing car industry. Borouge also appears to be looking at the Gulf market with new emphasis. On Wednesday, the company announced it had awarded a logistics contract to Gulftainer, a port operator based in Sharjah, to manage the establishment of a facility in Ruwais to package and transport output from the second-stage expansion to local markets. [e-mail]