Ruwais, United Arab Emirates
Borouge is the shorthand name for Abu Dhabi Polymers Co Ltd. Borouge is a joint venture between the Abu Dhabi National Oil Company (ADNOC) and Borealis. ADNOC has 60% of the joint venture and Borealis holds the remainder. Borouge will market the products of the plants.
The high price of crude oil is also pushing up ethylene prices. In this area, Borouge has a competitive advantage over many of its rivals, in that it gets its ethylene from the associated plant. This helps the Middle Eastern plant to offset its higher transport costs in order to maintain margins.
The ethylene plant produces around 600,000t/yr of ethylene. Parsons of the UK was awarded the project management contract. Linde (of Germany) and Bechtel (of the USA) formed a partnership which made a successful bid for the $640 million contract. This was the first contract that the new alliance won. The announcement of the contract award to supply feedstock to the polyethylene plant being built by Tecnimont came in late November 1998.
The plant is managed from Bechtel's London office, although Munich is also involved. Construction began in late 1999, and went online mid-December 2001.
ETHYLENE DICHLORIDE COMPLEX CANCELLED
ADNOC intended to build an ethylene dichloride complex (EDC), but this was cancelled because of a similar facility in Qatar providing too much competition. However, ADNOC is still contracted to buy 150,000t/yr of ethylene. It might wish to sell this on the international market, in which case it will require additional storage facilities. While it is also possible that Borouge could expand its polyethylene facilities, using the ethylene as a feedstock, this would entail finding a market for the polyethylene supply - an uncertain proposition.
The JV is building a petrochemical plant at Ruwais, near to the ADNOC refinery already in place. The plant is slated to produce 450,000t/yr of polyethylene via two bimodular 225,000t/yr polyethylene units. This will also require a container-loading terminal and packaging storage facility. The plant is due to be finished mid-2002.
Borouge has awarded a $400 million contract to Tecnimont, an Italian supplier. Tecnimont was preferred to Mitsui Engineering, Kvaerner Process and ABB Lummus (with local partner, NPCC). Price was an important element in the decision, as ADNOC specifically asked for discounts during a two-month period of retendering.
BORSTAR PE TECHNOLOGY
The plant will use Borealis' Borstar PE technology. This will produce both high-density and linear low-density polyethylene. The company will become the sole producer of bimodal polyethylene in the Middle East. Bimodal polyethylene pipes offer various benefits over conventional pipes: they are more cost effective, stronger and more malleable and durable. Borstar technology also makes production of larger and thinner pipes possible, with diameters of up to 1600mm - two and a half times bigger than conventional pipes.
The United Arab Emirates is seeing substantial development in the Ruwais area from ADNOC and possibly also from a new company called Emirates Basic Industries. This is a joint-stock company, whose founding shareholders are Abu Dhabi and the Dubai government. It is expected to issue an initial public offering soon for $1,000 million capitalisation.
The company also has a marketing subsidiary in Singapore, since the Far East is expected to be an important market. The company stated that likely future growth estimates in this market of between 5% and 7% were overcautious. Borouge's own estimate is nearer 10%. Borouge also expects Asian prices to rise steeply. India and China are expected to represent about a quarter of the company's polyethylene sales. South East Asia may account for a further 15%. The other main markets will be in Egypt, Syria and the rest of the Middle East.
Borealis is a well-known multinational in the market, based in Copenhagen. While Europe is its traditional heartland, it is eager to expand. The Ruwais plant in the United Arab Emirates (UAE) will be its first in the Gulf. ADNOC is the state-owned oil and petrochemicals giant of the country. This will be its first polymers business.
The entire project will cost around $1.2 billion, and will be paid for by shareholders' equity, a shareholders' loan and a commercial loan. The equity is expected to be about $360 million. While the company expects almost two thirds of the money for the new plants to come from shareholders' resources, Borouge is also trying to raise a loan of $200-500 million from commercial banks. The exact size of this loan is dependent on the amount raised through the shareholders' loan.