Borouge set to double output in petrochemicals

Total production capacity was expanded to 4.5 million tonnes per year from 2 million tonnes, which Borouge says makes it 'the largest integrated, single-sited polyolefins complex in the world'.

Borouge, the UAE petrochemicals firm, is on track to double output over the next year amid a challenging outlook for the industry worldwide on lower oil prices.

Wim Roels, the head of Borouge’s marketing arm, said yesterday at a launch in Abu Dhabi of the plastics maker’s new innovation centre, that the company’s output would double compared with last year. He said to expand, Borouge needed to invest while “managing costs carefully”.

“We are spending more than last year because we’re a growing company,” he said. “We cannot give details, but the oil price is what it is today – around US$50 a barrel – so of course we’re realistic. We’ll see how it develops.”

Total production capacity was expanded to 4.5 million tonnes per year from 2 million tonnes, which Borouge said makes it “the largest integrated, single-sited polyolefins complex in the world”. In January, Borouge said it would be able to reach maximum production capacity in phases by 2016.

The impact from the slump in crude prices began to be felt in the petrochemicals sector this year as regional producers, including Sabic, joined oil majors in reporting diminished profits and implementing cost-saving solutions.

However, Mr Roels said that polymer prices were not directly linked to the price of oil, although it has added pressure. “Polymer prices have been very volatile over the past year,” he said. “Of course, a turbulent environment like this is always the challenge because prices are changing very rapidly and significantly.”

Borouge is a joint venture between Adnoc and Austria’s Borealis, which is 64 per cent owned by Abu Dhabi’s Ipic. ​

Mark Garrett, the Borealis chief executive, said that lower oil prices improved its situation because it lowered feedstock costs. “Right now supply and demand for polymers is relatively balanced, but the Americans are building a lot of new capacity that will start up in 2018,” he said, adding that production would not ramp up until 2019.

Mr Garrett said that the US would be forced to export its product to Latin America, Asia and Europe, which would take away from Borouge’s customer base.

Yet Borealis plans to invest more into its UAE company to add a polymer plant with a capacity of “700 kilo tonnes”, he said.

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