Petrochemicals firm Borouge, a joint venture between Abu Dhabi's state-owned oil company Adnoc and Borealis of Austria, aims to increase its polymer production capacity to 10mn t/yr by 2030 from 4.5mn t/yr now. Argus spoke with chief executive Wim Roels about his plans for the company and opportunities in Asia.
Borouge has embarked on an expansion drive to boost capacity. Can you tell us more? Are there plans to move beyond polymers and into downstream chemicals?
Borouge has ambitious expansion plans. We have grown our capacity by tenfold since our company was established in 1998, and we have a vision to expand our production capacity from 4.5mn t/yr today to 10mn t/yr by 2030.
Last December, we broke ground on our fifth polypropylene line at our Ruwais petrochemicals complex in the UAE, which has a nameplate capacity of 480,000 t/yr. When our PP5 unit comes on stream in 2021, Borouge will see its total polyolefin production capacity increase to around 5mn t/yr.
In February 2019, we awarded three major contracts for the fourth phase of our Ruwais petrochemicals complex – the front-end engineering and design contract, the project management contract, and license contract associated with our new mixed-feed cracker complex.
This fourth cracker for Borouge will be the world's largest mixed-feed cracker when completed in 2025, with a capacity of 1.8mn t/yr for ethylene. It will also have an overall capacity of 3.3mn t/yr for olefins and aromatics using a variety of feedstocks, including ethane, butane and naphtha. Additionally, the new mixed-feed cracker will enable the production of many new petrochemical building blocks for Borouge to further grow our portfolio of products in the downstream business.
Which are the most important export markets for Borouge, and how do current trade restrictions impact the company?
Borouge serves fast-growing markets in the Middle East and Asia-Pacific. We are confident that our ongoing capacity expansion in the UAE puts us in a strong competitive position to provide timely and reliable supply to our customers in these regions.
The current trade negotiations between China and the US have impacted market confidence. China's GDP grew at 6.6pc last year, the slowest in 28 years. The IMF has forecast in its latest World Economic Outlook report released on 9 April that China's 2019 GDP growth will be at 6.3pc.
The unprecedented slowdown in China's economic growth has hit most industry sectors. Since the second half of last year, for instance, we have seen several OEM automakers shut down their plants for a couple of months because of low demand. This has not happened for over 25 years.
But we at Borouge are optimistic that the sector will recover in the medium term, especially given China's leadership in the development of new electric vehicles (NEVs) in the world.
Are you concerned about an oversupply of polyethylene from the US?
Our strategy at Borouge remains focused on offering differentiated and creative solutions at scale.
Borouge enjoys strong and long-standing partnerships with our customers and partners across the value chain. We work relentlessly with not just our customers, but also their customers and partners across the value chain to develop innovative end-to-end solutions, which help them meet their specific needs while also improving productivity and achieving their sustainability goals.
For instance, our global technical experts collaborate closely with producers and convertors early in the production process and help them optimise their manufacturing process and increase efficiency, expedite commercialisation, and develop exceptional end products with strong material properties that allow for a longer service life.
So while there may be greater supply coming on stream from competitors in the US, we remain confident that our high-quality and differentiated solutions are exceptional in the way they help our customers to address specific challenges, and Borouge is well-positioned to ride the current and future waves of growth, especially in fast-growing emerging markets.
Can you share more about your operations in Asia – a key consumer and producer of polymers? What are the key opportunities and challenges for polymer producers in Asia and the Middle East?
The polymer landscape in Asia is very competitive, however we see incredible growth potential in China, the Indian subcontinent and southeast Asian economies, given the macro trends of population growth, urbanisation and rising affluence of the middle class.
We have a state-of-the-art innovation centre in Abu Dhabi as well as an applications centre in Shanghai, China, which are constantly working to solve problems and develop new solutions that push boundaries and are able to help unlock value and provide significant advantage for our customers.
Borouge's advanced portfolio of products also help to address key challenges on the national agenda of many of the countries in the region. We are very proud of our range of advanced products for high-value applications such as water, gas and industrial pipe networks, power and communication cables, advanced packaging, automotive components, agriculture and healthcare.
We also have a compounding manufacturing plant in Shanghai that supports our mobility business. As I mentioned earlier, China is leading the development of NEVs in the world, and we at Borouge are keen to play a part in the industry transformation to more environmentally-friendly vehicles and bring to life the vision of "green and light" transport solutions that address both transport and sustainability needs.
What is the future of the plastics industry – the key driver of petrochemicals demand?
One of the key challenges facing the world today is how to balance global economic growth with the limited availability of natural resources, and this has led to greater attention on how a circular economy can be developed and sustained.
Plastics recycling is a critical component of the circular economy, and there is a need to develop and implement fundamental business model changes across the value chain that will achieve a sustainable after-use plastics market.
Borouge is committed to sustainability and is doing its part to support the plastics recycling goals of the circular economy. We are conducting research and development of new resin technology for advanced material formulation to make more durable and lighter products.
We are also working with partners to develop and introduce new disruptive packaging, improve packaging design for recyclability, integrate recyclates into high-performance packaging material for the fast-growing global e-commerce market, as well as enable more effective plastics after-use collection and recycling processes that can help us progress towards a zero-waste circular economy.
