Being blessed with gas reserves of 214 trillion cubic feet (tcf), the UAE is ranked the fifth largest gas holder in the world after Russia, Iran Qatar and Saudi Arabia. The Emirate of Abu Dhabi controls around 90% of the reserve with 198.5bn tcf followed by Sharjah with 10.7bn tcf, Dubai with 4bn tcf and Ras Al Khaimah 1.2bn tcf of gas.
This abundance of feedstock has led Abu Dhabi to establish a two geant petrochemical companies, Abu Dhabi Polymers Company (Borouge) and Ruwais Fertliser Industries (Fertil).
Historically, there has been little incentive to develop a local petrochemicals industry due to the small population. Aside from the urea-based fertiliser production at Ruwais Fertiliser Industries (Fertil), set up in 1982, it was in 1998 that Abu Dhabi entered the basic chemicals industry with the creation of Abu Dhabi Polymers Company (Borouge).
The first phase of Borouge, a joint venture of Vienna-based Borealis and state-owned Abu Dhabi National Oil Company (Adnoc), came on stream in 2002 and was an immediate success. Using cheap ethane feedstock to produce 450 000 tonnes a year (t/y) of polyethylene (PE), the complex was expanded in 2005 to increase production to 600 000 t/y.
Speaking to Petrochemical Middle East, Abdulaziz Alhajri, chief executive officer of Abu Dhabi Polymers Company (Borouge’s production company), shares his view about the vision of his company.
“Borouge aims to be the clear market leader in the Middle East and Asia in the infrastructure market sector, specifically in pipe systems and wire and cable applications, and a strong player in the automotive and advanced packaging plastics businesses. Our company mission is to become the leading provider of innovative plastics that create value for society,” Alhajri explains.
The company cares a lot about its ongoing relationship with key customers.
“We are therefore committed to expanding our operations to ensure a long term commitment to our customers, with a clear focus on operational excellence and safety at all times. Borouge’s manufacturing capacity is 600 000 tonnes of polyethylene per year (t/y). The current ongoing Borouge 2 expansion project is increasing this capacity to two million t/y and includes the production of polypropylene,” Alhajri adds.
Besides the Borouge 2 expansion, the company has started the third expansion project Borouge 3. “Recently we announced the successful completion of a feasibility study and the decision to enter the FEED (front-end engineering and design) stage of the Borouge 3 project, a further commitment to our customers and the expansion of our operations to meet their growing demands in the next decade.”
He adds that the Borouge 3 project will include the construction of an ethane cracker, second generation Borstar polypropylene and polyethylene units, an LDPE unit and a Butene unit, and related off-site utilities and marine facilities.
All these new expansions aim to increase the polyolyfins capacity in the UAE. Abu Dhabi has launched the Polymers Park (ADPP) to handle the new capacity, which is expected to be the world’s biggest plastics conversion cluster, in Mussafah. It will consume between 1m and 2m tonnes per year of polymers, mostly polyethylene (PE) and polypropylene (PP). “We are thereby expanding our polyolefins capacity by approximately 2.5 million tonnes per year by the end of 2013, reaching a total capacity of 4.5 million tonnes of polyolefins per year,” says the CEO.
Borouge has also established new logistics hubs in different parts of the world.
“In order to be a responsive supplier to our Chinese and North East Asian customers, we are investing in logistics hubs in Guangzhou and Shanghai as well as a 50 000 tonnes per year compounding manufacturing unit in Shanghai to produce differentiated solutions for the automotive and appliances industries,” says Alhajri.
“For our South East Asian customers we are investing in a logistics hub in Singapore. These will all be completed by the middle of 2010 in tandem with the commissioning of the Borouge 2 plant.”
“In line with our strategy, we are investing in an innovation centre in Abu Dhabi to further the development of polymers for new applications and support the growth of the downstream plastics industry within the United Arab Emirates,” he adds.
As with all companies around the world, Borouge faces different challenges, but its commitments remain the toughest.
“Our most important challenge is to keep our major investment projects on track and within budget. To date we have been successful and our people are focused and committed to our goals, naturally, building a world class, cross cultural and empowered organisation is also very important and we need Borouge to be a successful company for our customers,” says Alhajri.
Much of the gas reserves in Abu Dhabi are inextricably linked to oil production. At the same time, most have a high sour content, making extraction and processing an expensive business: For example, the Khuff gas reservoir has hydrogen sulphide content ranging between 20 000-200 000 parts per million (ppm), a level that has to be reduced to 50 ppm, Alhajri is confident that his company will has sufficient gas allocations for its projects. “Of course, we would not be considering a further expansion without a long term feedstock supply,” he says.
Launching several petrochemical projects in Abu Dhabi raised talks about human resource availability and how it may affect the projects, but this doesn’t seem to be a big problem. “Having the right people in the company is indeed a challenge but together with Borealis, one of our owners and a leader in the polyolefins industry, we are confident that we can capture the imagination of the right caliber of people to join the organisation,” says the CEO.
While peer companies are delaying projects to take advantage of the declining costs of the contracting works, which is the case of Qatar with the aromatic project and Al-Shaheen refinery, Borouge is stuck to its plans. “Borouge 3, as well as Borouge 2, is part of a long term strategic plan and although the world is experiencing volatile unprecedented economic conditions. We have no plans to delay our strategic projects. We forecast positive demand growth in our key market sectors and Borouge is committed to its goal to be the leading provider of innovative plastics solution to the industry,” Alhajri explains.
When asked about business sectors of Borouge and whether it plans to enter new businesses such as aromatics of specialised products, the CEO is clear: “We do not plan to produce aromatics at Borouge.”
The company relies on organic growth as it does not plan to enter the merger and acquisition scene.”It is not our intention to grow via acquisitions but rather focus on our strengths in building a world class manufacturing site, capable of meeting the demands of the high value plastics industry,” says the chairman.
Asian markets remain the main destination of the company’s products. “We mainly focus on the infrastructure, automotive and advanced packaging markets in the Middle East and Asia and are confident in their growth. In fact, you’ll find our plastic solutions in most everyday products from appliances to communication cables, and healthcare products to water pipes. Plastics also play in role in addressing some of the world’s challenges such as the access to safe drinking water and sanitation and weight reduction in motor vehicles,” explains Alhajri.
As rivals from the region are establishing new plants in Asia, as in the case of Saudi Bais Industries Corporation (SABIC) and Saudi Aramco, Borouge also launched new project in Shanghai in China. “We will produce 50 000 tonne per year of compounded materials at this new plant in Shanghai and the resins will be supplied from our operations in Abu Dhabi. These plastics solutions are predominantly for the fast growing automotive industry in China” he concludes.
Borouge Facts
1998: Abu Dhabi Polymers Co Ltd (Borouge) founded in 1998 (Joint venture of the Abu Dhabi National Oil Company and Austria’s Borealis)
Nov 1998: Ethylene cracker contract awarded to Bechtel/ Linde
June 1999: Polyethylene contract awarded to Italian Tecnimont
December 2001: Start up the complex and the production exceed the designed capacity
January 2002: First shipment exported
October 2002: Official inauguration of the Plant in Al-Ruwais
July 2005: Borouge unveils the Borouge2 expansion
June 2008: WorleyParsons conducts the feasibility study for the third expansion
April 2009: Borouge 3 expansion enters design phase
