ADNOC, OMV discuss merging petrochemical businesses

July 19, 2023
ADNOC and OMV Group have entered formal negotiations to potentially form a new jointly owned petrochemicals company via the proposed merger of the operators’ existing individual interests in their Borealis AG and Borouge PLC ventures.

Abu Dhabi National Oil Co. (ADNOC) and OMV Group have entered formal negotiations to potentially form a new jointly owned petrochemicals company via the proposed merger of the operators’ existing individual interests in their Borealis AG and Borouge PLC ventures.

If approved, the potential transaction would result in the combination of the Borealis and Borouge businesses under a newly formed, jointly controlled entity held equally by the partners, ADNOC and OMV said in separate mid-July releases.

Aligned with the operators’ shared goals of expanding production of high-value chemicals while accelerating the sustainable transition towards a low-carbon future, ADNOC and OMV confirmed negotiations are still preliminary and remain subject to a host of conditions such as:

  • Agreement between parties on commercial transaction parameters (e.g., valuation of the involved businesses)
  • Requisite board approvals by both companies.
  • All necessary regulatory approvals, including merger control clearances.

Neither ADNOC nor OMV revealed a timeframe for when negotiations regarding the possible merger would conclude.

OMV holds a 75% majority interest in Borealis, with ADNOC holding the remaining 25% stake (OGJ Online, May 3, 2022; Mar. 12, 2020).

Following initial public offering of 10% of its total shared capital to global investors on the Abu Dhabi Securities Exchange in June 2022, Borouge—the strategic joint venture founded by Borealis and ADNOC in 1998—is now owned by ADNOC (54%) and OMV (36%), according to Borealis’ 2022 annual report to investors.

Current ventures

Borouge currently is undertaking a fourth expansion of its integrated 5-million tonne/year (tpy) polyolefins complex in Ruwais, about 250 km west of Abu Dhabi City, UAE, with subsidiary Borouge 4 LLC’s $6.2-billion construction of a more than 1.5-million tpy ethane cracker project that will also include the addition of two polyethylene plants based on Borealis’ proprietary Borstar technology, as well as a 100,000-tpy cross-linked polyethylene plant, that together will produce 1.4 million tpy of polyethylene to help meet increased demand for polyolefins by manufacturers across the Middle East, Africa, and the Asia-Pacific (OGJ Online, May 26, 2022).

Construction on the Borouge 4 project broke ground in February 2022 alongside startup of the Ruwais complex’s fifth polypropylene plant (PP5), which is designed to produce 480,000 tpy of PP (OGJ Online, Feb. 24, 2022).

Bayport Polymers LLC (Baystar)—a 50-50 joint venture of Borealis and TotalEnergies SE—in 2022 also commissioned its 1-million tpy ethane steam cracker at TotalEnergies Petrochemical & Refining USA’s 200,000-b/d integrated refining complex in Port Arthur, Tex. (OGJ Online, July 21, 2022).

Operated by TotalEnergies, the nearly $2-billion cracker project supplies ethylene feedstock to Baystar’s existing 400,000-tpy polyethylene (PE) production site in Bayport, Tex. Ethylene produced by the cracker also will provide feedstock to a 625,000-tpy Borstar PE unit currently under construction in Pasadena, Tex.