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Chemicals complex elevates emirate

A massive chemicals complex under development in Taweelah will transform Abu Dhabi into one of the world's largest chemicals producers.

A massive chemicals complex under development in Taweelah will transform Abu Dhabi into one of the world's largest chemicals producers, a key step in the emirate's diversification efforts, executives in the project say. The first stage of the Chemicals Industrial City will come online in 2014, the same year as a major plastics complex in Ruwais.

At that point, the emirate could have a more sophisticated chemicals capability than Saudi Basic Industries Corporation (SABIC), the region's leader, said Mark Garrett, the chief executive of Borealis, an Austrian chemicals firm majority-owned by the Government's International Petroleum Investment Company (IPIC). "That means a lot more export income, that means that Abu Dhabi becomes a serious player in the basic chemicals arena," Mr Garrett said. "I think they have the potential to get beyond the level of sophistication in SABIC."

The first stage of the project, called Tacaamol, will produce about 4.8 million tonnes a year of products ranging from plastics to basic chemicals, according to Ali al Dhaheri, a senior projects co-ordination manager at Chemaweyaat, the project's holding company. Chemaweyaat was launched in February as a joint venture between IPIC, the Abu Dhabi National Oil Company (ADNOC) and the Abu Dhabi Investment Council, with a mission to develop the chemicals industry in the emirate. Chemicals are viewed as a development priority and a logical step in the diversification of the economy away from crude oil exports, because the emirate's large reserves of oil and gas provide cheap raw materials.

Chemaweyaat has selected most of the technology for the project and will award a contract for front-end engineering and design this year, Mr al Dhaheri told a MEED conference in the capital yesterday. An engineering, procurement and construction contract would be awarded next year, he said. Mr al Dhaheri declined to offer a cost estimate for Tacaamol, saying that it was confidential, but Khadem al Qubaisi, the managing director of IPIC, said in January that investment in the development could exceed US$20 billion (Dh73.4bn).

Tacaamol would represent a sea-change in the development of the emirate's chemical industry, both for its size and its use of naphtha, an oil derivative, as the key input. The emirate's plastics complex at Ruwais, which is operated by Borouge - a joint venture between Borealis and ADNOC - uses low-cost ethane, a derivative of natural gas. The switch to naphtha at Tacaamol will allow Chemaweyaat to produce a much wider range of products. However, it will also expose the company's profit margins, partially, to the volatile market prices for naphtha across the world, Mr Garrett said.

"The world market price, of course, establishes a competitive situation for naphtha, and the country that is producing it has to decide: is it better to go down the value chain and convert to other products, or sell the naphtha," he said. The plant will use about 6 million tonnes of naphtha a year, piped 250km from ADNOC's Ruwais refinery. Borealis was advising IPIC on the technical side of the project, Mr Garrett said, and was likely to have a role in developing the plant's cracker, the technological centrepiece that transforms naphtha into a wide range of chemical streams.

Borealis had the option to take an equity stake in the project at a later date, he said. IPIC is at the centre of Abu Dhabi's petrochemicals expansion. The fund owns 64 per cent of Borealis and 51 per cent of the Tacaamol project. It also owns 40 per cent of Chemaweyaat and recently took full ownership of Nova Chemicals, a Canadian firm. The breadth of the project demonstrates IPIC's wide range of in-house assets: Borealis is helping it develop the plant while MAN Ferrostaal, its newly acquired engineering firm, will help develop infrastructure for the site. Nova's expertise could also play a role, Mr Garrett said.

Tacaamol will be followed by a second-phase development called Al Chemeya, also to be located in Taweelah, Mr al Dhaheri said. Al Chemeya will process propane into usable products such as polypropylene, a raw material in plastics, through two plants with a capacity of 650,000 tonnes a year each. Mr al Dhaheri said Chemaweyaat was "open to discussion with industry partners" to help it develop the Al Chemeya project.

cstanton@thenational.ae

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