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Abu Dhabi, UAEWednesday 20 June 2018

Exclusive: Borouge eyes expansion on the back of Adnoc's downstream strategy

Growth areas include development of electric vehicle parts for the Indian automotive sector

Borouge, which produces about 4.5 million tonnes of polyolefins and olefins, targets new expansion in Africa, according to CEO Ahmed Omar Abdulla. Courtesy: Borouge
Borouge, which produces about 4.5 million tonnes of polyolefins and olefins, targets new expansion in Africa, according to CEO Ahmed Omar Abdulla. Courtesy: Borouge

Borouge, the UAE’s biggest petrochemical producer, will look to collaborate with part-owner Abu Dhabi National Oil Company on its new downstream strategy with an eye on expansion in its core markets, its chief executive said on Wednesday.

"The market is open for us, mainly it will be again our traditional markets - Asia, Africa of course and Middle East. We have a presence in Africa but we’re going to expand of course. We have some sales there, but our ambition is to grow in Africa,” Ahmed Abdulla, said in an interview with The National.

The UAE - the second-largest oil producer in the Gulf – is boosting downstream investments as it looks to generate more profit from the sale of products in markets such as Asia. Abu Dhabi’s five-year $109 billion spending plan approved in 2017, includes a more robust downstream component, with state-owned Adnoc expected to announce its strategy for the sector soon.

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

In July, the firm’s stakeholders Adnoc and Austria’s Borealis announced plans for a new project called Borouge 4 as well as a new polypropylene-5 plant with a planned production capacity of 600,000 tonnes per year that is set to be integrated with the existing facility adjacent to the 922,000 barrel per day Ruwais refinery. Borouge 4 will be able to ramp up chemicals production to meet Abu Dhabi’s slated targets.

However, Mr Abdulla told The National in November that the firm planned to increase its production beyond targeted levels as it looked to more than double its existing capacity.

The planned expansion 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.

Engineering, procurement and construction awards on the polypropylene-5 plant will happen "within two months", said Mr Abdulla, and said the pre-front end engineering and design on the Borouge 4 facility is expected “in the coming period.”

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Read more:

Abu Dhabi to increase petrochemical production capacity beyond current targets

Adnoc expected to announce downstream strategy "soon", CEO says

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“By that time we’ll be able to see the total framework of the project so that we can move fast into implementation,” he said.

Borouge, which announced expansion of a compounding manufacturing plant in the Chinese province of Fengxian last year is currently "in the engineering stage" to boost production up to 125,000 tonnes from 90,000 tonnes per year, said Mr Abdulla, adding that the date for completion will be announced soon.

Borouge is also looking to expand more in the lucrative Indian plastics sector, where it wants to supply segments such as agriculture, construction, pipes as well as the automotive industry.

Among the components to be developed in the Indian automotive sector are potential parts for electric vehicles - a segment poised for growth in Asia’s third largest economy on the back of increasing efforts by the government to curb fossil fuel-induced pollution.

“Electric vehicles are a fact and will expand because of the environmental issues. It’s a matter of how fast the technology will evolve. We look at it as an opportunity and we will look at how to capture this market and to be more innovative,” said Mr Abdulla.

“We’re a leader in the automotive industry - [we make] dashboards and other products and we see this as an opportunity.”