Adnoc and ADQ form joint venture to spur investment at Ruwais chemicals hub

Partners will announce new projects available to investors by the end of 2020

Adnoc will form a joint venture with Abu Dhabi holding company ADQ to hasten the development of chemicals manufacturing at Ruwais.

The companies will evaluate and invest in "select, anchor chemicals projects" and attract other investors to the industrial hub in the emirate's Al Dhafra region.

“Our partnership with ADQ will expand on existing efforts to maximise the value of our assets in Ruwais to kickstart the development of the UAE’s downstream derivatives sector, support the transformation of Ruwais into a global hub for industry and attract additional foreign direct investment to Abu Dhabi,” said Dr Sultan Al Jaber, Adnoc Group chief executive and Minister of Industry and Advanced Technology.

ADQ's portfolio of assets includes several large industrial and manufacturing companies in non-oil sectors such as transportation, metals and power, including Abu Dhabi Ports, Etihad Rail, Emirates Steel and Taqa.

.@ADNOCgroup and ADQ have formed a joint venture to create a new investment platform that will fund the development of strategic projects within the Ruwais Derivatives Park, a key enabler of ADNOC Downstream’s 2030 smart growth strategy and the UAE’s industrial growth strategy. pic.twitter.com/8ljfbI4CgA

— مكتب أبوظبي الإعلامي (@admediaoffice) July 22, 2020

ADQ would play "a key role” in providing essential infrastructure development services together with public and private entities, said ADQ chief executive Mohammed Alsuwaidi.

"We are driving value creation and helping to build a prosperous economy for the benefit of Abu Dhabi," he said.

Adnoc will hold a 60 per cent stake in the JV while ADQ will take the remaining 40 per cent.

Through their joint venture, they will undertake a feasibility study to identify projects with the most potential.

These will be announced by the end of the year along with specific details "on the range of potential opportunities available to prospective investors and partners", the companies said.

Adnoc invited international oil companies and financial institutions to invest around $45bn to develop its downstream sector. Courtesy Adnoc

ADQ will rely on its partnerships with existing suppliers across various industrial sectors through its extensive portfolio to help develop a 6-square-kilometre derivatives manufacturing park at Ruwais, which is also the location for what will be the world’s largest refining and chemicals complex by 2025.

Adnoc plans to double its refining capacity and treble its petrochemicals capacity as part of a multibillion dollar drive to attract foreign direct investment into the downstream sector.

The feedstock coming from the expansion will be channelled into the park that will be integrated with the larger complex.

We are driving value creation and helping to build a prosperous economy for the benefit of Abu Dhabi

The park is also expected to produce higher-value chemical products such as packaging materials, coatings, flooring, high-voltage insulation and automotive composites.

It will also include industry clusters, making use of derivatives produced in adjoining facilities.

The partnership between Adnoc and ADQ will support broader economic activity and job creation through long-term growth at Ruwais and the increased investment attracted to Abu Dhabi as a result.

In 2018, Adnoc invited international oil companies and financial institutions to invest about $45 billion (Dh165.3bn) to develop its downstream sector.

The latest push to drive investment further along the downstream value chain comes after earlier investments by Austria’s OMV and Italian energy company Eni in Adnoc’s refining sector.

Eni took a 20 per cent stake while OMV took a 15 per cent stake in Adnoc’s refining unit last year. The two also established a trading joint venture, Adnoc Global Trading, to sell products from the Ruwais refinery to customers in Asia.

The venture with ADQ also comes after a flurry of investment activity in Adnoc’s midstream sector this year.

A consortium of the world’s leading infrastructure and sovereign wealth funds signed an agreement worth $20.7bn (Dh76bn) in June to invest in Abu Dhabi’s natural gas pipeline infrastructure.

Investors such as Global Infrastructure Partners, Brookfield Asset Management, Singapore’s sovereign wealth fund GIC, the Ontario Teachers’ Pension Plan Board, South Korea's NH Investment & Securities and Italy’s Snam bought into the infrastructure deal – the largest in the energy sector so far this year.

The Adnoc-ADQ joint venture will be incorporated within the Abu Dhabi Global Market, pending required approvals.