Page 11 - DMEA Week 10 2020

DMEA PETROCHEMICALS DMEA
OMV expands petchem footprint with extra Borealis stake
UAE
The deal will give OMV a greater say over the Ruwais refining and petrochemical project.
AUSTRIA’S OMV has reached a deal to acquire an extra 39% stake in petrochemicals giant Bore- alis from Abu Dhabi state investor Mubadala, it said on March 12.
The purchase, subject to corporate and other approvals, will mark a major step forward in OMV’s strategy of growing its petrochemical business in the Middle East. The oil firm already has a 36% stake in Borealis, but controlling a majority share will provide with it with greater say over a key project in the UAE.
Borealis, through its Borouge joint venture with the Abu Dhabi National Oil Co. (ADNOC), controls the Ruwais complex, which ADNOC wants to establish as the world’s largest inte- grated refining and petrochemicals hub. Ruwais currently produces 4.5mn tonnes per year (tpy) of petrochemical products, including 2.3mn tpy of polyethylene and 1.76mn tpy of polypropyl- ene. But ADNOC wants to double its capacity by 2030, as part of the UAE’s drive to expand petro- chemical exports, particularly to China.
Mubadala, a minority shareholder in OMV, will retain the remaining 25% interest in Borealis after the transaction is completed.
OMV sees the outlook for petrochemicals as bullish, driven by robust economic growth and increasing living standards in emerging countries, as well as steady growth in developed nations.
“The market for sustainable chemicals, and the circular economy volumes, is very interest- ing and showing strong growth,” OMV’s chief
downstream operations officer Thomas Gangl said. “Both OMV and Borealis have recognised this opportunity and will now combine forces. This extends the value chain even further, namelybeyondthelifecycleofplasticproducts.”
Besides expanding its production base, Bore- alis also wants to build up its sales operations to lock in demand, particularly in the Middle East and East Africa. It has recently set up a new mar- keting office in import-dependent Egypt. The company also wants to make inroads into China, moving further inland from industry clusters along its coastline.
OMV said it would pay for the Borealis stake with proceeds from its divestment programme, supported by cash flow. The group plans to shed €2bn ($2.2bn) of assets by the end of 2021.
On the same day, the company also announced it would sell its 51% interest in gas pipeline operator Gas Connect Austria to the country’s top power producer, Verbund. The pair have initiated exclusive negotiations, but OMV did not say how much it anticipated raising from the deal.
Gas Connect controls a 900-km gas network in Austria and also manages the marketing and provision of transport capacity at the country’s entry and exit points. The remaining 49% of the company is owned by a 60:40 joint venture between Germany’s Allianz and Italy’s Snam.
OMV has also launched the process of selling a chain of fuel filling stations in southern Ger- many. ™
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