The Abu Dhabi National Oil Company (Adnoc) and Austria-based energy firm OMV are poised to finalize a partnership to establish a global chemicals joint venture by the end of March, as recently announced in a joint statement.
This collaboration, initially revealed in July 2023, will merge the Abu Dhabi-listed Borouge with Europe’s Borealis and will also feature the acquisition of Nova Chemicals, resulting in the formation of Borouge Group International (BGI).
In this arrangement, Adnoc will hold a 25 percent stake in Borealis, while OMV will possess the remainder. Borouge will have a 54 percent ownership by Adnoc and 36 percent by Borealis, with both entities functioning under the BGI name.
This $60 billion enterprise is set to become the fourth largest globally in terms of nameplate production capacity.
BGI will also purchase Nova Chemicals from Abu Dhabi’s Mubadala Investment Company for $13.4 billion, inclusive of debt, to enhance its presence in the North American market.
In addition, Adnoc and OMV have finalized an asset usage agreement for Borouge 4, permitting BGI to manage and market products from the newly established polyolefins facility.
It is projected that this agreement will yield about $400 million in net profit over the upcoming three years, according to the statement.
While operations at Borouge 4 are anticipated to ramp up throughout this year, BGI will not take full ownership of the facility from Adnoc and OMV until at least 2029.
The companies expect BGI to achieve investment-grade credit ratings from S&P, Moody’s, and Fitch.
Additional Information:
A potential tender offer to exchange existing Borouge shares for BGI shares is projected for 2027, contingent on market conditions and approval from the UAE’s Capital Market Authority.
Until that time, BGI will be privately held, while Borouge will continue to be listed on the Abu Dhabi stock exchange and fulfill its planned annual dividend. Post-tender offer completion, BGI will sustain the dividend payouts.
On March 18, Borouge’s shares increased by 1.6 percent to AED2.55, although they have dipped by 3 percent year-to-date.
The UAE’s oil and gas sector has faced scrutiny from Iran following recent tensions after actions taken by the US and Israel against Tehran on February 28, leading to Iran targeting oil and gas facilities across the GCC region.
