Abu Dhabi chemicals maker Borouge and AD Ports Group have made an agreement to study the concept of an alternative export hub at Fujairah on the country’s east coast.
The move is aimed at boosting the export resilience of Borouge, allowing the company to bypass the Strait of Hormuz, where months-long blockades by Iran and the US have disrupted maritime operations.
The agreement is “an essential element of Borouge’s long-term export strategy” which will ensure continuity of delivery for its global client and add “resilience by design” across its logistics network, the companies said in a joint statement on Tuesday.
AD Ports Group, the biggest ports and free zones operator in Abu Dhabi, is evaluating ways to cut reliance on “constrained maritime passages”.
The collaboration will involve AD Ports' strong marine connectivity and access to its comprehensive services of Fujairah Terminals and Eastern ports facilities in the UAE, “while assessing the development of dedicated polyolefins infrastructure on the east coast”, the companies said.
“This strategic partnership marks a significant step forward in Borouge’s logistics capabilities, supporting our continued growth,” Hazeem Al Suwaidi, chief executive of Borouge, said.
“With AD Ports Group, we are building a more flexible and diversified network that enhances reliability, ensures continuity of supply, and reinforces our position as a trusted global supplier, supporting the UAE’s industrial strategy.”
Hormuz disruptions
The Strait of Hormuz, the trade route through which a fifth of global oil and gas supplies flowed before the war, remains closed. The closure has delivered a supply shock, and analysts expects oil prices to climb beyond $150 a barrel level.
Brent has risen more than 50 per cent since the conflict began on February 28.
The strait also accounts for a significant volume of global trade of commodities, petrochemicals, ammonia, fertilisers, aluminium and steel.
Borouge is the latest among the UAE companies that are seeking trade routes to bypass Hormuz. Fujairah, which is outside the strait, has emerged as the closest option.
Last week, UAE state-owned energy major Adnoc said it plans to complete the expansion of the west-east crude oil pipeline by 2027, with the project expected to double export capacity through Fujairah.
Trade corridors
Sharjah and Oman on Sunday launched a logistics corridor to move goods by sea and land more easily, as the emirate looks to offset the impact of the Strait of Hormuz closure on trade.
The arrangement allows goods to cross borders more seamlessly, with Oman's Sohar port on the east coast crucial, along with Duqm and Salalah.
Heavy goods vehicles are now used far more extensively in the UAE to collect everything from supermarket staples to industrial goods from Oman and Saudi Arabia, and send manufactured items out.
Dubai's government on Sunday also released the first statistics from its 'green corridor' with Oman, which was set up after Iran began striking international shipping.
The number of customs declarations surged from 12,000 in March to nearly 100,000 in April, with the value of transported goods up from Dh1 billion ($270 million) to more than Dh8 billion.
The route has “quickly emerged as a vital trade artery, redirecting global shipments arriving through Oman and transporting them overland to Dubai through the Hatta Border Crossing under streamlined and accelerated customs procedures”, Dubai Government Media Office said at the time.
Borouge expansion ambitions
Borouge, was set up as a joint venture between Adnoc and Austrian chemicals producer Boreali, in 1998.
However, in March this year, Adnoc’s energy investment arm XRG and Austrian company OMV finalised the process to form Borouge Group International, a move that is expected to place the UAE as a vital player in global chemicals.
Adnoc and OMV agreed on terms last year to merge their polyolefins businesses, Borouge and Borealis, to create a $60 billion company. Borouge International is now the world's fourth-largest polyolefins producer with premium products, XRG said at the time.
Borouge last year awarded a Dh1.95 billion ($531 million) contract to Adnoc Logistics and Services aimed at streamlining maritime deliveries.
The 15-year partnership allows Adnoc L & S manage the transport of up to 70 per cent of Borouge’s annual production to Khalifa Port in Abu Dhabi and Jebel Ali in Dubai, the companies said at the time.
