In 1998, Abu Dhabi National Oil Company (ADNOC) unveiled plans for developing a petrochemicals plant. A joint venture with Austria’s Borealis, the investment strategy was in no way a stretch of the imagination. With control of 95% of the United Arab Emirates vast hydrocarbon assets, Abu Dhabi had considerable resources at hand to develop this project.
The ADNOC- Borealis joint venture was named Borouge, and was set to build a US$1.2 billion petrochemical facility to produce polyethylene and polypropylene, also referred to as plastic. At the time, some found this a rather perplexing decision—the Emirate had vast oil and gas resources, however, the UAE had yet to make any significant ventures into the world of polymers. And while the Gulf was known for its oil and gas reserves, the GCC’s capacity for plastic was miniscule.
A lot has changed in the last 15 years. Today, the GCC’s petrochemicals portfolio includes a sizable share of plastic. Of the 129.2 million tons of capacity, the Gulf’s chemical industry produces 23.8 million tons of polymers.
The numbers look even more positive when you compare it to the global chemical landscape. The Gulf’s petrochemical capacity has seen a cumulative growth of 10.4% since 2008, when the global petrochemicals industry was growing at just 3% in the same period.
Borouge, meanwhile, has added considerable capacity to its own facilities within the UAE. Borouge 2, operational since 2010, has tripled the polymer capacity of the first facility. And by 2014, a third plant will produce up to 2.5 million tons of capacity, doubling Borouge’s polymer manufacturing base.
The birth and expansion of Borouge is just one instance of national support for plastic producers. You can see examples of government support in Saudi Arabia and Qatar as well. Sadara, the Saudi Aramco- Dow Chemical joint venture, has a sizable capacity for producing polyethylene and polyolefins. And the Qatofin facility in Mesaieed, the QAPCO and Total project, has been producing low density polyethylene since 2009.
At the turn of the 20th century, not many would have predicted that investments in plastic projects were a good business decision, but since then, the industry has grown from humble beginnings into what is looking like a formidable force. Recent data proves that the Gulf’s polymer producers are not only adding capacity, but are transforming themselves into plastic powerhouses by outperforming the global chemical industry during a period of economic uncertainty.
Since 2008, production of plastic in the GCC has grown by 14.3% every year. The global plastics industry, meanwhile, has added just over 3% of production in the same period.
