Abu Dhabi's main petrochemicals producer said yesterday it was pushing ahead with long-term projects to expand its production despite the global financial crisis and the ensuing steep decline in crude oil demand.
Borouge, one of the world's largest fertilizer producers, said a multi-billion dollar expansion venture to nearly triple the company's output capacity is under way and will be completed on time in 2010, a Borouge official said.
Another ambitious programme to double production beyond 2010 is on the cards and could be implemented once it is approved.
"We are pursuing all expansion projects and the recent global developments will not have any impact on our plans. We are counting on a steady growth in our markets," said David Walton, Marketing Manager of Borouge's Pipe Unit.
"By 2010, our production will nearly triple to reach two million tonnes per year. We are currently producing around 400,000 tonnes of polypropylene but in 2010, we will also be producing polyethylene," he told Emirates Business in an interview at the Future Energy summit in Abu Dhabi.
In 2007, Borouge signed contracts worth nearly $3.1 billion (Dh11.3bn) with two international companies for its second phase of expansion to maintain its position as one of the world's largest fertilizer and polyethylene producers. Borouge, partly owned by the Abu Dhabi National Oil Company (Adnoc), signed the deals with Tecnimont SPA of Italy and Spain's Techicas Reunidas.
The contracts cover the company's second stage of an ongoing expansion programme, dubbed Borouge 2, at its main facilities in Ruwais, nearly 200 kilometres east of Abu Dhabi city.
The contract with Tecnimont SPA, worth around $1.855bn, is for the construction of three new Borstar technology polyolefins units and associated material handling facilities, laboratory facilities and marine works. This is the largest supplier contract Borouge has signed since its inception as a company in 1998 and is awarded on a lump sum turnkey basis.
The contract with Tecnicas Reunidas SA, worth an estimated $1.234bn, is for the construction of the offsite and utility facilities for the expanded plant, and is awarded on a convertible lump sum turnkey basis.
"There is also a Borouge 3 stage but it has not approved yet… This project will take our total production to four million tonnes in 2013 or 2014," Walton said.
"All these expansion projects are prompted by a steady growth in our traditional markets and new markets which we plan to enter… Our main markets currently include the UAE, Saudi Arabia, Iran, China, India and Australia…but we expect to enter new markets in the future as there is a strong demand worldwide."
The market for polypropylene and polyethylene is growing by 8-10 per cent, Walton said adding that Borouge's expansion programme is taking into consideration growth in demand in many countries. "We decided to embark on expansion projects after long studies… We will not be short of markets and I think all the production will be exported after the expansion is completed."
Walton declined to specify the investments in Borouge's expansions but company officials have recently spoken about a total spending of nearly $5.5bn in maintenance and expansion, including $4.3bn in Borouge 2.
"These projects largely support the UAE's plans to diversify its economy by concentrating on downstream and other industries," he said. "I don't think there will be any cut in investment or shelving in projects in the long term because of the global crisis… The company has sufficient resources to carry out its plans."
In addition to an ethylene cracker, the Borouge 2 project comprises the world's biggest olefins conversion unit, producing 752 kilotonnes per annum and two Borstar polypropylene plants with a combined annual capacity of 800kt along with a new Borstar Enhanced PE plant that will have an annual capacity of 540kt to complement the existing 600kt unit.
The new project will be located next to Borouge's existing petrochemical complex in Ruwais.
The expansions by the company, which is 60 per cent owned by the Adnoc and 40 per cent by Austria's Borealis, also include a plastics plant in China to take advantage of massive demand in the world's most populous nation.
In a recent statement, Borouge said the plant in Shanghai would be its first outside the UAE and would target the steadily expanding Chinese market for the automobile plastics industry.