Abu Dhabi - The Petrochemicals Sector.

This consists of a fertiliser complex and an olefins complex at Ruwais, a PVC venture and a plant producing chlorine, sodium hypochlorite, hydrochloric acid, etc.

The olefins complex went on stream in December 2001 with a capacity of 600,000 t/y of ethylene, 225,000 t/y of high density polyethylene (HDPE), and 225,000 t/y of linear low density polyethylene (LLDPE). This is a JV called Abu Dhabi Polymers Co. (Borouge), owned 60% by ADNOC and 40% by Borealis (see background in Vol. 60, No.2). Phase-2 at Borouge increased PE production capacity by 130,000 t/y from early 2005 through debottlenecking work by Tecnimont under a $40m EPC contract. Phase-III will involve a 1.45m t/y ethane cracker and several downstream units. (see Vol. 63, down24cDec13-04).

After keeping a low profile in recent years, some $7,500m are being invested at Ruwais to build major new capacity to produce petrochemicals by 2010/11. At the heart of the spending is the Phase-III expansion of Borouge. Estimated to cost $4,500m, the 1.45m t/y ethane cracker is a central element in the expansion, which will also see construction of a 540,000 t/y polyethylene unit and two 400,000 t/y polypropylene (PP) units. On completion, it will increase Borouge's capacity to more than 2m t/y. Engineering, procurement and construction (EPC) contractors submitted commercial bids for this in late October 2006.

Work is more advanced for the melamine plant - the third such new facility to be built in the Middle East, after Qatar and Egypt. In early August, three groups of contractors submitted engineering, procurement and construction management bids for the estimated $175m contract. Abu Dhabi Melamine Industry Company (ADMIC), a new company set up in mid-2006, is handling the project. It is 60% owned by Ruwais Fertiliser Industries (Fertil), AMI Agrolinz Melamine International of Austria owns the remainder. The 80,000 t/y Ruwais melamine plant will be built beside the existing Fertil complex, which will supply urea feedstock to the new unit.

At Fertil, capacity is being ramped up through an expansion and debottlenecking exercise. About $700m are being spent on increasing existing capacity by adding new ammonia and urea units and granulation facilities. The debottlenecking will increase capacity by the installation of a 350 t/d carbon dioxide unit. In late July 2006, two groups submitted cost estimates to Fertil for the combined licence, front-end engineering and design (FEED) and EPC contract on its major expansion project. For the debottlenecking project, FEED contracts were later awarded for the main process plant and the granulation unit.

Next in line is the $1,000m gasoline and aromatics expansion (GAE) project planned by Takreer. The world-scale complex will involve producing 600,000 t/y of paraxylene through naphtha reforming, with an option to produce benzene and gasoline. A tender for the FEED contract was to be issued in late 2006. Paraxylene from the GAE project will be used as feedstock for a purefied terephthalic acid (PTA) and a polyethylene teraphthalic (PET) resins complex, planned by IPIC, along with Taiwan's Chinese Petroleum Corp (CPC). Details of the plant configuration are awaited.

Feedstock for Borouge's Phase-III project will be primarily sourced from the third-phase expansion of the onshore gas development (OGD-3) and the Phase-2 expansion of the Asab gas development (AGD-2) project. Both will produce 1,300 MCF/day of gas for reinjection and 24,000 t/d of natural gas liquids (NGL). Increased oil output from the Asab and Bab fields will result in additional gas, which will be used as feedstock for Fertil's expansion project.

The Phase-III expansion last month took a step forward, with the submission of bids for the offsites and utilities (O&U) contract and the issue of invitation to bid documents for what will be the world's largest olefins conversion unit (OCU). Four technical bids have been submitted for the estimated $1,200m O&U contract. They are: Bechtel and Fluor Corporation of the US, Tecnicas Reunidas of Spain and a three-strong grouping of Linde of Germany, Tecnimont of Italy and Engineers India. The scope of works covers off-plot infrastructure, on-plot instrumentation and installation of a communications system. The award is due by the end of January. An award is also due soon on the polyolefins package. Tecnimont and Fluor are competing for the work on this project. Several international contractors have been invited to submit technical bids by early February for the contract to build the OCU. Prospective bidders include Toyo Engineering Corp. of Japan, Larsen & Toubro of India, Taiwan-based CTCI, Daelim Industrial Company and Samsung Engineering Company, both of South Korea and ABB Lummus Global of the US. The last of these is the licenced technology provider for the unit and front-end engineering and design contractor.

The OCU will have capacity of more than 750,000 t/y and will be used for olefin metathesis to turn n-butenes and ethylene into propylene.

Borealis of Copenhagen is the second biggest producer of PE and PP in Europe. IPIC, 50-50 owned by ADNOC and Abu Dhabi Investment Authority (ADIA), in May 1998 bought 25% into Borealis and another 25% was bought by OMV of Austria in which IPIC has 19.56%. The other 50% in Borealis is held by Statoil of Norway. IPIC and OMV bought their stakes from Neste Oy, with OMV having sold its petrochemical unit PCD Polymers to Borealis (see DT No. 3).

Borealis and Borouge on Sept. 14, 2006, announced plans to establish an innovation centre in Abu Dhabi. The centre, developed jointly by both companies, will be focused on the development of practical solutions for plastic material applications. Planned to be operational by 2009, it will employ 45 technical staff.

"We have a very clear approach to creating value through innovation", says Borealis CEO John Taylor. "We want to co-operate to nurture young talent and help young people to grow".

IPIC and OMV, central Europe's leading oil and gas producer, are planning to incorporate AMI Agro-linz Melamine International (AMI), one of the leading producers internationally of melamine and plant nutrients, into Borealis. OMV and IPIC each hold 50% of AMI. The final decision will be made in the first half of 2007.

Borealis is headquartered in Vienna. As a holding company, Borealis will provide support for AMI's further international expansion. AMI's headquarters will remain in Linz, Austria. Gerhard Roiss, OMV deputy-chairman and Borealis supervisory board chairman, said: "The bundling of AMI's expansion strategy into Borealis will be a good solution for Borealis and AMI, whose businesses complement each other. Thanks to Borealis' ownership structure - OMV owns 35% and IPIC 65% - AMI's future development will continue to be supported and developed by experienced strategic partners".

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 represents 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. Borealis already holds a competitive position with the plastics production site Borouge in Ruwais. The extension of Borouge will add another yearly capacity of 1.3m 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. 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. In addition, Muhammad al-Azdi (IPIC representative in Borealis' supervisory board) and John Taylor, CEO of Borealis, were to be appointed to the AMI supervisory board.

For AMI, the new ownership structure will provide the advantage of being able to advance its international expansion together with one of the world's leading plastics producers.

Final commercial prices were submitted in late November 2006 to Abu Dhabi Melamine Industry Co. (ADMIC) for the engineering, procurement and construction management (EPCM) contract to build a melamine plant in Ruwais, following changes in the scope of works. Three companies priced the estimated $175 million contract. They are the Fluor Corp., the Australian/German Shedden Uhde and Australia's Worley-Parsons. ADMIC is a 60:40 joint venture of Ruwais Fertiliser Industries (Fertil) and AMI Agrolinz Melamine International. The plant will be built beside the existing Fertil complex, which will supply urea feedstock to the new unit.