A multibillion-dirham project to diversify Abu Dhabi’s economy reached an important milestone yesterday with the signing of a deal to build a chemicals plant in the Western Region.
Chemaweyaat, the Abu Dhabi chemicals joint venture, announced the project in conjunction with Indorama Ventures, a Bangkok-based manufacturer of the raw material for polyester.
While the value of the new plant was not given, this marks the beginning of what Abu Dhabi hopes will be billions of dollars of investment at a chemicals “city” spanning 70 square kilometres near Ruwais.
The plant would be Chemaweyaat’s first plant, and Indorama is Chemaweyatt’s first foreign partner.
In 2008, the Abu Dhabi National Oil Co (Adnoc), International Petroleum Investment Co (Ipic) and Abu Dhabi Investment Council founded Chemaweyaat in an effort to broaden the emirate’s downstream resources industry.
The plant is to be part of Madinat Chemaweyaat (Chemicals City), a 70 square kilometre site east of Ruwais. Abu Dhabi Chemicals Integration Company (Tacaamol), the name of the Thai-Emirati joint venture, is to produce 1.4 million tonnes a year of paraxylene, which can be used to make fibres or plastic bottles, and 500,000 tonnes of benzene.
Chemaweyaat did not respond to queries about the project’s budget.
“The teams of both parties have worked hard to reach this stage and we look forward to their continued spirit of cooperation during project implementation and the establishment of future operations,” said Ahmed Al Mheiri, the chief executive of Chemaweyaat, which will hold a 51 per cent stake in the plant.
“We are very excited about this venture with Chemaweyaat, which represents our maiden entry in the Gulf region,” said Aloke Lohia, the chief executive of Indorama Ventures.
“Both parties which contribute their expertise and resources, optimising the benefits that Abu Dhabi offers to create a world-class aromatics chain industry that will result in sustainable economic and social development.”
Planning for Madinat Chemaweyaat dates to 2009, when Khadem Al Qubaisi, the managing director of Ipic, said investment there could eventually exceed US$20 billion (Dh73.46bn) and that it would be the biggest chemicals complex in the world.
The idea of creating a central complex with infrastructure, feedstock and benefits to attract foreign investors was also behind Polymers Park, a plastics conversion complex in Mussaffah launched by Abu Dhabi Basic Industries Corp in the same year as Chemaweyaat.
Designed to host as many as 70 companies, Polymers Park has faced difficulties expanding beyond a handful of tenants because of the small size of the local consumer market.
Abu Dhabi and other Arabian Gulf players also face competition with North America, where ample supplies of cheap shale feedstock have sparked an industrial revival, and Asia, a hub for the auto, white goods, and other factories that use such chemicals.
In 2010, Chemaweyaat scrapped plans to build a separate complex in Taweelah at Khalifa Port and Kizad, deciding instead to move the dozen joint ventures it hopes to create to Madinat Chemaweyaat.
There, plants would be closer to feedstock produced by Takreer, Adnoc’s refining company, which is on track to finish a $10bn expansion to double production by February.
The chemicals development is designed to use naphtha, an oil-based feedstock that Arabian Gulf producers are increasingly turning to as gas supplies get squeezed.
A front-end engineering contract for site preparation and infrastructure was awarded this summer, said Chemaweyaat, which previously hired Foster Wheeler and Halcrow for the project planning.
Shares of Indorama on the Thai stock exchange dropped more than 5 per cent yesterday to 20.10 baht yesterday.
This week the company also announced that it had refinanced a $640 million loan and a separate $360m working capital facility for its US business.
ayee@thenational.ae
