Borouge 4 to catapult polymers capacity to 10m tonnes/year

ADNOC and Borealis aim to expand production of polymers from the current 4.5m tonnes/year to 10m tonnes/year at their Abu Dhabi, UAE joint venture Borouge by 2023, the companies announced on 16 July.

The planned $10bn expansion, to be called Borouge 4, will be integrated with ADNOC’s nearby Takreer refinery. Borouge 3, the last phase of expansion at the complex, was completed in 2016.

The two companies also announced they will build a new polypropylene (PP) plant at Borouge with an annual production capacity of 500,000 tonnes. The PP plant will use Borealis’ Borstar proprietary technology and will be integrated with Borouge 3.

The two firms said the expansion of polymers output at the UAE’s petrochemical complex targets the Asian market, where demand for high-grade polymers is forecast to double by 2040, according to the two companies.

“We are committed to realising downstream growth and stretching the value from every barrel of oil we produce,” said ADNOC CEO Ahmed Al Jaber.

Borouge is a joint venture between ADNOC, the crude oil producer in the UAE’s Abu Dhabi which owns a 60% stake, and Austrian polymers producer Borealis (40%). Borealis is owned by Abu Dhabi’s Mubadala (64%) and Austrian energy major OMV (36%).

Started in 1998, the Borouge joint venture has a lifespan of 30 years. The two companies said on 16 July they would review a potential extension.

ADNOC and Borealis also said they had commenced engineering, procurement and construction (EPC) tendering for the 500,000 tonne/year PP plant at Borouge 3.

According to the firms, the new plant would help soak up the surplus propylene coming out from the Takreer refinery’s propane dehydrogenation (PDH) unit. “Global demand for polyolefin products is being driven by the growth in emerging economies,” said Mark Garrett, CEO of Austria-based polymers producer Borealis. “Both ADNOC and Borealis are determined to take advantage of Borealis leading edge Borstar technology, a world-leading product portfolio and a favourable geographic location at the pivot point between east and west, to capitalise on the markets of steepest growth in Asia.”

ASIA KEY TO VOLUMES

The doubling of capacity will pay off on the back of booming Asian urbanisation and also the balancing of global markets after new capacities come on stream in the US and the Middle East, a Borealis executive said in an interview with ICIS.

Markku Korvenranta, Borealis vice president for base chemicals, expressed no concern about the new polymers capacities coming on stream within two years, especially in the Middle East and the US. More capacity is also expected in Asia to tap into local demand on the back of urbanisation but that will not cause a problem either, he said.

“For sure, there will be increases in [polymers] capacities in Asia, in countries like China, India or in the southeast, but we believe that Borouge will be in the long term a competitive place for manufacturing of polymers. It sits nicely between east and west so we can address the western and eastern hemispheres from that location at a cost competitive manner,” said Korvenranta.

“There will be a quite a lot of capacity [coming on stream] in the next 12 to 18 months, but this is of no immediate relevance for Borouge 4, where we are making an investment for the next 30 years. And it would only start up in 2023,” he added.

The talk about overcapacity is recurrent and Korvenranta’s own colleague, Borealis’ CFO Marks Tonkens, said in an interview with ICIS in May that the company’s 625,000 tonnes/year polyethylene (PE) plant on the US Gulf Coast, announced in March, would also be able to dodge overcapacity due to its start up date in 2021.

LONG-TERM STRATEGY

The plant is part of a larger project to be developed with France’s energy major Total and Borealis’ sister company NOVA Chemicals. Korvenranta also said the potential overcapacity in the coming two years will find “some balancing” by the time Borealis’ projects come on stream, and added that the long-term supply and demand forecast is “supportive” for large-scale projects like Borouge 4.

Korvenranta would not comment on the specific products or capacities which will be coming out of Borouge 4, as the expansion plan is only in its initial stage of pre-front end engineering and design (FEED).

“In this stage we are going to pre-FEED and the figures talked about [for total production at Borouge in 2023] of 10m tonnes/year and 11m tonnes/year are good enough. We need to go to the pre-feed and do the final technology selection, the configuration for feedstock slate and finalise the integration with Takreer refinery. After that, we can tell exactly what the capacities we are targeting are,” he said.

The Borouge expansion will include the construction of a mixed feed cracker, able to crack both crude- and gas-based feedstock. “We’ll be counting on a deep integration with the Takreer refinery complex and the entire feedstock mix is planned to come from Abu Dhabi sources. How much will come from Takreer or how much it will come from gas processing, we don’t know yet at this stage,” said Korvenranta.