x Abu Dhabi, UAEMonday 22 January 2018

Ipic to bring in Nova Chemicals

International seeks to consolidate Borealis and Nova Chemicals, and explores new projects for Nova in Abu Dhabi alongside Adnoc, the emirate's oil giant.

A Nova Chemicals manufacturing plant in Canada. Ipic bought the company in 2009.
A Nova Chemicals manufacturing plant in Canada. Ipic bought the company in 2009.

International Petroleum Investment Company (Ipic) is seeking to bring Nova Chemicals to Abu Dhabi, as the government-owned company switches focus to the domestic petrochemical industry.

Abu Dhabi is embarking on a US$20 billion (Dh73.45bn) investment in petrochemicals by building a chemical city known as ChemaWEyaat in the Western Region. The aim is to add value to the oil and gas industries and diversify the structure of the economy.

Ipic is a 40 per cent shareholder in ChemaWEyaat, but also owns several other ventures including Nova Chemicals in Canada, which it bought in July 2009, and a 64 per cent stake in Borealis, a chemicals company based in Austria.

Khadem al Qubaisi, the managing director of Ipic and the chairman of Aabar Investments, said Ipic planned to consolidate Nova and Borealis.

"In the near term, we're looking to consolidate the two companies together and bring Nova to Abu Dhabi to do some projects with Adnoc [the Abu Dhabi National Oil Company] and ChemaWEyaat," said Mr al Qubaisi.

He said the plans were expected to be implemented over the next two years, but declined to give further details.

Borealis and Adnoc have previously co-operated in the creation of Borouge, a plastics company.

Analysts said the move showed a shift of focus at Ipic, which had previously sought to invest and diversify overseas.

"Anything that will integrate and will help to bring technology and skills to Abu Dhabi, we'll do that," Mr al Qubaisi said.

Ipic is seeking to raise capital expenditure and target "mini-acquisitions", after recent moves by other investment companies in the emirate to increase spending, he added.

"We are interested to buy a few names in the market," Mr al Qubaisi said, without revealing any takeover targets.

But he dismissed recent speculation Ipic was looking to take full control of Borealis. "We're satisfied with the stake at 64 per cent."

The increased focus on acquisitions follows a similar move by Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, which recently signalled plans to increase capital and investment expenditure to about Dh60bn this year, an almost fourfold rise over its usual average expenditures of Dh16.4bn.

Thaddeus Malesa, an independent energy analyst, said Ipic's plans to consolidate its holdings would help it pursue economies of scale in petrochemicals production.

But Mr Malesa said the plans to become more active in Abu Dhabi marked a switch from Ipic's mandate to pursue diversified assets abroad.

"Ipic has been called upon to pursue geographic diversification by upstream and downstream assets outside the UAE," Mr Malesa said.

"Ipic is very active internationally. They're trying to strike deals all over the place, including in Qatar. They're refocusing on the UAE and Abu Dhabi in particular."

Mr Malesa said Adnoc and Ipic were seeking to diversify the economy and add value to the oil industry by investing in petrochemicals and plastics.