The Ruwais Industrial Complex, outside of the Borouge 3 Tower. Victor Besa / The National
The Ruwais Industrial Complex, outside of the Borouge 3 Tower. Victor Besa / The National
The Ruwais Industrial Complex, outside of the Borouge 3 Tower. Victor Besa / The National
The Ruwais Industrial Complex, outside of the Borouge 3 Tower. Victor Besa / The National

Adipec 2021: Adnoc and Borealis sign $6.2bn partnership to expand Borouge's output


Jennifer Gnana
  • English
  • Arabic

Abu Dhabi National Oil Company and Austrian chemicals producer Borealis have signed a $6.2 billion partnership agreement for the development of the fourth unit of a polyolefin manufacturing complex in the UAE's downstream hub of Ruwais.

Sheikh Khaled bin Mohamed bin Zayed, a member of the Abu Dhabi Executive Council, and chairman of the Abu Dhabi Executive Office and the executive committee of the board of directors of Adnoc, witnessed the signing of the agreement.

“Adnoc and Borealis’ significant investment in the fourth expansion of Borouge ensures the long-term and sustainable supply of core materials to critical sectors vital to both the UAE and global economy,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and Adnot

“This expansion will see Borouge become the world’s largest single-site polyolefin complex, as it continues to play an integral role in the development of Ta’ziz, enhancing local industrial supply chains and boosting in-country value opportunities,” he added.

Last year, Adnoc and industrial holding company ADQ announced plans to work on projects worth $5bn within the Ruwais Derivatives Park.

The joint venture, Ta'ziz, will look to invest in chemical projects worth $3bn, with $2bn expected to be spent on the development of port and infrastructure facilities in Ruwais.

  • The Ruwais Industrial Complex is located 250 kilometres west of the UAE's capital, Abu Dhabi. Victor Besa / The National
    The Ruwais Industrial Complex is located 250 kilometres west of the UAE's capital, Abu Dhabi. Victor Besa / The National
  • Adnoc plans to build a large-scale 'blue' ammonia plant at the complex. Victor Besa / The National
    Adnoc plans to build a large-scale 'blue' ammonia plant at the complex. Victor Besa / The National
  • The ammonia plant will be located at the Ta'zizz industrial and chemicals hub. Victor Besa / The National
    The ammonia plant will be located at the Ta'zizz industrial and chemicals hub. Victor Besa / The National
  • The birthing area and container terminal in place will allow materials to be easily transported. Victor Besa / The National
    The birthing area and container terminal in place will allow materials to be easily transported. Victor Besa / The National
  • The view from the Borouge 3 Tower shows the size of the complex. Victor Besa / The National
    The view from the Borouge 3 Tower shows the size of the complex. Victor Besa / The National
  • The area will help to grow the UAE's manufacturing and industrial base. Victor Besa / The National
    The area will help to grow the UAE's manufacturing and industrial base. Victor Besa / The National
  • Adnoc and CNPC have agreed to explore downstream and upstream partnership opportunities. Victor Besa / The National
    Adnoc and CNPC have agreed to explore downstream and upstream partnership opportunities. Victor Besa / The National
  • The facility will have the capacity to produce 1,000 kilotonnes of ammonia per year, Adnoc says. Victor Besa / The National
    The facility will have the capacity to produce 1,000 kilotonnes of ammonia per year, Adnoc says. Victor Besa / The National
  • Blue ammonia is a more easily transportable fuel source made from blue hydrogen. Victor Besa / The National
    Blue ammonia is a more easily transportable fuel source made from blue hydrogen. Victor Besa / The National
  • The UAE is drawing up a comprehensive road map to position itself as an exporter of hydrogen. Victor Besa / The National
    The UAE is drawing up a comprehensive road map to position itself as an exporter of hydrogen. Victor Besa / The National
  • Adnoc already produces 300,000 tonnes of hydrogen annually and plans to expand this to more than 500,000 tonnes. Victor Besa / The National
    Adnoc already produces 300,000 tonnes of hydrogen annually and plans to expand this to more than 500,000 tonnes. Victor Besa / The National
  • A sign displays the old name of Adnoc’s gas processing plant. Looking ahead, the company plans to achieve gas self-sufficiency by 2025. Jennifer Gnana / The National
    A sign displays the old name of Adnoc’s gas processing plant. Looking ahead, the company plans to achieve gas self-sufficiency by 2025. Jennifer Gnana / The National

Borouge, a joint venture between Adnoc and Austria's Borealis, is going through a large capacity addition as part of plans unveiled in 2018 by the national oil company to invest $45bn with partners in the downstream sector.

The Emirates plans to triple its petrochemical production capacity from 4.5 million tonnes — currently produced entirely by the Borouge facility in Ruwais — by 2025.

The feedstock for the planned expansion will be supplied by Adnoc.

The new facility will see Borouge produce polyolefin products such as polyethylene and polypropylene, as well as non-polyolefin products such as benzene and butadiene. The compounds find varied uses in packaging, plastics and acrylics industries.

With the addition of the new unit, Borouge could produce enough polyolefins to meet the manufacture of pipes to supply water to 35 million households, the company said. The new products will feed into a wide range of uses including industrial-grade pipes, cables, films and personal protective equipment.

“Borouge is the key vehicle that enables us to serve the growing customer needs across the Middle East and Asian markets with future-orientated and differentiated solutions based on Borstar, Borealis’ proprietary state-of-the-art technology,” said Thomas Gangl, chief executive at Borealis.

The company also plans to install a carbon capture unit to offset emissions by 80 per cent. The unit will be operational in time for the start-up of Borouge 4.

Borouge operates a 450,000 tonnes per annum polythene unit, which was commissioned in 2001. Borouge 2 and 3, commissioned in 2010 and 2014, raised the capacity to 2 million tonnes and 4.5 million tonnes of polyethylene and polypropylene per annum, respectively.

With the final unit, overall polyolefin production will reach 6.4 million tonnes, making Borouge 4 the largest-single site facility for polyolefins.

The increased output will capture the growing demand for polyolefins in the Middle East, Arica, and Asia.

Borealis, the Austrian company which is a joint shareholder with Adnoc, is the eighth-largest producer of polyethylene and polypropylene and has oil and gas company OMV as a significant minority shareholder.

Adipec 2021 day one - in pictures

  • Suhail Al Mazrouei, Minister of Energy and Infrastructure, speaks at the Abu Dhabi International Petroleum Exhibition and Conference. All photos: Victor Besa / The National
    Suhail Al Mazrouei, Minister of Energy and Infrastructure, speaks at the Abu Dhabi International Petroleum Exhibition and Conference. All photos: Victor Besa / The National
  • Mohamed El-Erian, chief economic adviser of Allianz, addresses a session at Adipec.
    Mohamed El-Erian, chief economic adviser of Allianz, addresses a session at Adipec.
  • Paul Polman, former chief executive of Unilever and co-chair at Global Commission for Economy and Climate, attends a session at Adipec.
    Paul Polman, former chief executive of Unilever and co-chair at Global Commission for Economy and Climate, attends a session at Adipec.
  • Adipec participants attend a session with Paul Polman, former chief executive of Unilever and co-chair at Global Commission for Economy and Climate, holding centre stage.
    Adipec participants attend a session with Paul Polman, former chief executive of Unilever and co-chair at Global Commission for Economy and Climate, holding centre stage.
  • Adipec will run from November 15 to November 18 at the Abu Dhabi National Exhibition Centre.
    Adipec will run from November 15 to November 18 at the Abu Dhabi National Exhibition Centre.
  • Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, says oil and gas industry will have to invest more than $600bn annually until 2030 to keep up with expected demand.
    Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, says oil and gas industry will have to invest more than $600bn annually until 2030 to keep up with expected demand.
  • Adipec 2021 is the first major global event after Cop26, which concluded on Sunday.
    Adipec 2021 is the first major global event after Cop26, which concluded on Sunday.
  • Adipec is said to be a critical bellwether for the fortunes of the energy industry in the middle of great change.
    Adipec is said to be a critical bellwether for the fortunes of the energy industry in the middle of great change.
  • Dr Fatih Birol, left, executive director of International Energy Agency, and John Defterios, Professor of Business at NYU Abu Dhabi attend an Adipec session.
    Dr Fatih Birol, left, executive director of International Energy Agency, and John Defterios, Professor of Business at NYU Abu Dhabi attend an Adipec session.
  • This year's event is taking place after the UAE, Saudi Arabia and Bahrain all committed to achieving a net-zero future by the middle of the century.
    This year's event is taking place after the UAE, Saudi Arabia and Bahrain all committed to achieving a net-zero future by the middle of the century.
  • Alfred Stern, chief executive of OMV, attends a panel discussion on 'What is the New Normal for Demand?'
    Alfred Stern, chief executive of OMV, attends a panel discussion on 'What is the New Normal for Demand?'
  • Yousef Gamal El Din, anchor of Bloomberg, and Russell Hardy, chief executive at Vitol, during a session on 'Trading Spotlight: The Diversification of Energy Markets'.
    Yousef Gamal El Din, anchor of Bloomberg, and Russell Hardy, chief executive at Vitol, during a session on 'Trading Spotlight: The Diversification of Energy Markets'.
  • Nicolas Terraz, of TotalEnergies, attends Adipec session on 'What is the New Normal for Demand?'
    Nicolas Terraz, of TotalEnergies, attends Adipec session on 'What is the New Normal for Demand?'
  • Yaser Al Mazrouei, executive director of Upstream Directorate at Adnoc, attends the Adipec session on 'What is the New Normal for Demand?'
    Yaser Al Mazrouei, executive director of Upstream Directorate at Adnoc, attends the Adipec session on 'What is the New Normal for Demand?'
  • Lorenzo Simonelli, chairman and chief executive of Baker and Hughes, during the Adipec session on 'What is the New Normal for Demand?'
    Lorenzo Simonelli, chairman and chief executive of Baker and Hughes, during the Adipec session on 'What is the New Normal for Demand?'
  • Mansoor Al Hamed, chief executive of Mubadala Petroleum, attends the Adipec session on 'What is the New Normal for Demand?'
    Mansoor Al Hamed, chief executive of Mubadala Petroleum, attends the Adipec session on 'What is the New Normal for Demand?'
  • Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs, attends the opening ceremony at the 37th Abu Dhabi International Petroleum Conference and Exhibition. Photo: @HHMansour via Twitter
    Sheikh Mansour bin Zayed, Deputy Prime Minister and Minister of Presidential Affairs, attends the opening ceremony at the 37th Abu Dhabi International Petroleum Conference and Exhibition. Photo: @HHMansour via Twitter
  • Sheikh Mansour bin Zayed and Dr Sultan Al Jaber take in the atmosphere at the 37th Adipec. Photo: @HHMansour via Twitter
    Sheikh Mansour bin Zayed and Dr Sultan Al Jaber take in the atmosphere at the 37th Adipec. Photo: @HHMansour via Twitter
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers

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Updated: November 16, 2021, 6:55 AM