Abu Dhabi - The Supreme Petroleum Council and ADNOC.

The Supreme Petroleum Council (SPC), the top decision maker for the hydrocarbon sector, and ADNOC are likely to delay a further expansion of the Ruwais refinery until they make certain this will be profitable (see Downstream Trends No. 2 of next week).

- ADNOC and Borealis of Copenhagen have a petrochemicals joint venture, called Abu Dhabi Polymers Co. (Borouge), with a complex being built at Ruwais, an expanding industrial zone 250 km east of Abu Dhabi city. This will consist of an ethane-based ethylene plant with a capacity of 600,000 t/y and two polyethylene units of 225,000 t/y each. The complex will cost about $1 bn and will be completed in 2001. Bids for the contract to build the polyethylene units are to be submitted by the middle of February 1999. Borouge is owned 60% by ADNOC and 40% by Borealis.

Borealis, the biggest producer of polyolefins in Europe, is now owned 50% by Statoil of Norway, 25% by International Petroleum Investment Co. (IPIC - which is 50-50 owned by ADNOC and the Abu Dhabi Investment Authority), and 25% by OeM. IPIC holds 19.6% in OeMV, the biggest oil and industrial company in Austria. IPIC and OeMV bought their stakes in Borealis from Neste Oy of Finland in September 1997. Until then Neste used to hold 50% in Borealis.

As part of the September 1997 acquisition agreement, OeMV sold its 100% petrochemical unit PCD Polymere to Borealis. That move came after a fall in oil prices hurt profits in the European petrochemicals industry. PCD Polymere was not so important to OeMV, and Neste had a cash flow problem at the time. IPIC moved in with cash and helped all concerned (see Downstream Trends No. 3).

Abu Dhabi is to have a second petrochemical venture to be built at Ruwais, approved in February 1997 by the SPC. To be in operation by mid- 2001, this will have the capacity to produce 520,000 t/y of ethylene di-chloride and 420,000 t/y of caustic soda (chemicals used in the salt industry). The plant will also produce chlorine and salt for domestic consumption and hydrogen for the oil refining complex at Ruwais.

ADNOC is delaying construction of a proposed aromatics plant in Ruwais to produce paraxylene and benzene, which would be taking naphtha from the Ruwais refinery's new condensate units. This would be a joint venture with a qualified foreign company.

The capacity of the fertiliser producing complex at Ruwais, a joint venture between ADNOC and Total of France called Fertil, is to be doubled.

- The government of Abu Dhabi is intending to build a $1.5-2 billion aluminium smelter with a capacity of 220,000 t/y in a project promoted by the state's General Industry Corp. (GIC).

A final decision on this is yet to be taken by the SPC and would have political implications for both Dubai and Bahrain. Dubai has been concerned that Abu Dhabi's project would seriously affect its own smelter (Dubal), which has been expanded at high cost, while aluminium prices have come down. Bahrain's smelter (Alba) is one of the largest in the world. Oman is intending to build an aluminium smelter as well. A smelter project in Qatar has been postponed or shelved.

- A steel rolling mill is to be built for GIC. Initially, its capacity will be 500,000 t/y. The mill will be supplied by a European consortium headed by SMS Schloemann Siemag of Germany, under a $60.3m contract signed in 1997. Construction of the plant is to begin in early 1999.

- Overseas investments by IPIC now include stakes in four integrated groups: 19.6% in OeMV of Austria, 25% in Borealis of Copenhagen, 12% in Cepsa of Spain, and a smaller equity in Total of France.

In October 1998 IPIC agreed to acquire a 50% stake for a mere $500m in what was to become South Korea's largest oil refining and retail company, with a capacity of 665,000 b/d and 2,350 petrol stations. Its 50% partner would be Hyundai Oil, under a complex deal yet to be finalised (see Part 4). Also in October 1997, IPIC and Cepsa launched a 50-50 venture to establish a retail network in Morocco and distribute Cepsa products.

IPIC also has a 30% share of a 100,000 b/d refinery being built at Multan, Pakistan, along with a terminal and storage facilities, in a venture called Pak-Arab Refinery Co. (Parco). OeMV has another 10% in Parco, bought in November 1997 from IPIC.

Further acquisitions overseas are under study and IPIC is considering partnerships in some bargain assets in Asia (see DT No. 4).