Expansion of Borouge petchems plant moves forward

Abu Dhabi has moved forward on a multi-billion-dollar expansion of the Borouge petrochemicals complex at Ruwais, aimed at increasing both the variety and volume of products it can produce.

Abu Dhabi National Oil Co (Adnoc) and Vienna-based Borealis, which shares ownership of Borouge 60/40, said yesterday that they have approved the initial stage of the fourth major expansion at the plant, known as Borouge 4, which it expects will be completed by 2023 and will be integrated with Adnoc’s adjacent oil refining complex.

The partners also agreed to hire contractors to build an additional polypropylene plant – dubbed PP5 – to integrate with the third expansion phase, which ramped up to full production of about 4.5 million tonnes a year last spring.

The Borouge 4 expansion would more than double output at the plant and is part of Abu Dhabi’s strategy to extract more value of its vast crude oil natural resource by adding refining capacity, as well as by supporting “conversion industries” that make products out of the petrochemicals raw material.

Petrochemicals have generally been a good investment for Abu Dhabi and help hedge against the impact of falling oil prices. Borouge, which has its main marketing operations in Singapore, markets its products particularly to China and other Asian markets.

“The Borouge 4 complex and polypropylene plant will allow us to grow our current petrochemical production to almost 10 million tonnes per year, enabling us to take advantage of the market opportunities we have identified, particularly in Asia, where the high-grade polymer market is set to double by 2040,” said Sultan Al Jaber, the chief executive of Adnoc.

The start-up of the crosslinked polyethylene plant in spring last year was the final piece of the US$4bn “Borouge 3” plant expansion project, which itself more than doubled overall capacity to 4.5 million tonnes a year, making it the world’s largest integrated polyolefins complex.

Borouge 4 would not only more than double capacity, the expansion would use oil-derivative feedstock, naptha, instead of the ethane-based feedstock in the existing plant, which adds the capacity to make so-called C4 chemicals, mostly used to make products for fuel blending.

“Global demand for polyolefin products is being driven by the growth in emerging economies,” said Mark Garrett, the chief executive of Borealis, adding that the plant’s unique technology, “a world-leading product portfolio and a favourable geographic location at the pivot point between East and West, [enable it] to capitalise on the markets of steepest growth in Asia.”

The Borouge complex is adjacent to Adnoc’s main oil refinery in Ruwais, located about 200 kilometres southeast of Abu Dhabi City. Its expansion was completed last year, doubling capacity to 800,000 barrels per day before a major fire there in January, which also reduced capacity at Borouge. The capacity is expected to be replaced in the first half next year.

Borealis is controlled by Abu Dhabi, with Mubadala Investment Company holding a direct 64 per cent stake, and a further share through Mubadala’s 24.9 per cent stake in Austrian oil company OMV, which owns 36 per cent of Borealis.

Petrochemicals have generally been a good investment for Abu Dhabi