ABU DHABI - The OMV Stake.

IPIC holds a 17.6% stake in OMV, the largest energy and industrial group in Austria which has been privatised. OMV's upstream division produces oil abroad and plans to have additional E&P ventures in several countries. It produces oil and gas in Austria. It has growing divisions for oil refining and products trade, and for gas trades. About 40% of Russian gas exports in Europe are carried by OMV pipelines. After expansions are completed, OMV pipelines will become the transit point for 60% of Italy's and 47% of France's gas imports.

IPIC's purchase into OMV was implemented in two phases. On May 19, 1994, IPIC bought 13% of the shares from the Austrian state holding company OIAG. The remaining shares came from a rights issue to increase the company's nominal capital by June 20 of that year. IPIC paid $450m for the investment, which was labelled as a "strategic alliance", with OMV well placed at both the upstream and downstream ends of the European energy business (see background in down3AbuDoverseasJan17-05).

Equity In Borealis: Under a series of deals signed on Sept. 15, 1997, OMV sold its 100%-owned PCD Polymere to Borealis of Copenhagen, then a 50-50 venture between Statoil of Norway and Neste Oy of Finland created in 1994. This made Borealis the second largest producer of polyolefins in Europe and put it on a level with Dow Chemical and Montell in the industry's global rankings, with ExxonMobil in the lead. In return for PCD Polymere, OMV got 25% in Borealis and IPIC obtained the other 25% of Neste's equity for cash. PCD Polymere's plants in Austria and southern Germany raised Borealis' polyolefins capacity by more than 900,000 t/y to well over 3m t/y. Borealis has large plants in Norway, Finland, Sweden, Belgium and Portugal and smaller plants in Germany and France.

In June 2005, Statoil sold its 50% stake in Borealis to IPIC and OMV. This raised IPIC's stake in Borealist to 65% and that of OMV to 35%. Borealis has 40% equity in Abu Dhabi Polymers (Borouge), with ADNOC holding 60%, which has a complex at Ruwais now being expanded (see down2AbuDrefPetchJan8-07).

Earlier this month IPIC and OMV announced plans for consolidation of two companies they jointly own. They are planning to incorporate Linz-based AMI Agrolinz Melamine International into Vienna-based Borealis. OMV and IPIC both hold a 50% stake in AMI, which produces melamine and plant nutrients. MEED on Jan. 12 quoted OMV Deputy Chairman Gerhard Roiss as saying: "The bundling of AMI's expansion strategy into Borealis will be a good solution for Borealis and AMI, whose businesses complement each other".

For OMV this has the advantage that its strategic focus on its core business will be further strengthened, while at the same time OMV will profit from the growing plastics market enhanced by the assets of AMI via its investment in Borealis. Overall, this measure constitutes the last step in AMI's strategic repositioning, which started in May 2005 with IPIC's acquisition of 50% of the company.

The incorporation of IPIC's and OMV's 50% of AMI into Borealis represented a strong combination of AMI's and Borealis' fields of business and operative synergies. Both companies are well positioned in their respective markets in Europe and are in the process of strengthening their growing presence in the Middle East. The expansion of Borouge at Ruwais will add another capacity of 1.45m t/y of polyolefins and is expected to go on stream in 2010

The establishment of a production facility for melamine in Ruwais is being pursued by AMI and ADNOC. This will have a capacity of 80,000 t/y (see down2AbuDrefPetchJan8-07). In 2005 the AMI Group had a workforce of around 1,000 and sales of 470m. Borealis had sales of 4.8 bn and a workforce of 4,543.

The AMI supervisory board was to be appointed as of Jan. 1, 2007: Gerhard Roiss was to take over the position of AMI supervisory board chairman from OMV CEO Wolfgang Ruttenstorfer. Muhammad al-Azdi (IPIC representative in Borealis' supervisory board) and John Taylor, CEO of Borealis, were to be appointed to the AMI supervisory board.