United Arab Emirates Petrochemicals Report Q4 2009

United Arab Emirates Petrochemicals Report Q4 2009

The UAE is making solid progress towards the development of new capacity, but BMI cautions that the
completion of the second phase of the Borouge petrochemical complex at Ruwais, Abu Dhabi, could
suffer owing to the sluggish recovery in demand in Asia at the same time as Chinese capacity is rising.
Borouge – a joint venture of the Abu Dhabi National Oil Company and Austria’s Borealis – is targeting
polyolefins production at 2mn tpa by 2010 at its Ruwais complex. The 1.45mn tpa Borouge 2 cracker is
set to provide much of the feedstock for the increase in capacity. The expansion would more than double
the company’s overall capacity to 4.5mn tpa. It will be the largest plastics and petrochemicals complex in
the Middle East and one of the largest in the world. Presently, Borouge supplies 35% of its output to the
Middle East, with the rest exported to Asian markets.
The company is hoping that Asian markets will absorb the increase in output. However, at the same time
as Borouge’s cracker is due to come online in 2010, growth in Asian markets is due to be far less than
before the financial crisis of September 2008. Trends in UAE petrochemical production will remain
closely tied to its key export markets, notably Asia’s economic powerhouse, China. BMI believes that
Chinese demand for petrochemicals will have improved in H209 following some difficult months which
have seen a sharp slowdown in construction activity. This will be supported by the government's
economic stimulus programme, although this could also work against UAE petrochemicals production in
the long-run as the programme targets the development of domestic petrochemicals capacities and could
potentially help the country to challenge the Middle East in this area. Although H209 will be an
improvement on the poor performance seen in H208, levels of demand growth are not forecast to return to
2007 levels until 2010 at the earliest. Nevertheless, Borouge anticipates that polyolefin demand in the
Middle East and Asia should absorb the capacity expansions.
Solid progress is being made on the expansion of Borouge’s petrochemicals complex at Ruwais with the
signing of engineering contracts for the ethylene and polyolefin plants that are to form part of Borouge 3,
which is scheduled to come online in 2013. In July 2009, Borouge awarded three main contracts worth
about US$22mn to Tecnimont for the FEED stage of the Borouge 3 plant expansion. The contract
includes the FEED of the polyolefin units and the utilities and offsite facilities with responsibility for a
350,000tpa LDPE plant supplying the cable and wire industry and utilising LyondellBasell’s technology.
Borouge 3 downstream units will also include two Borstar PE facilities, each with capacity of 540,000tpa,
and two Borstar PP plants, each with capacity of 450,000tpa. Borouge 3 is due to be completed in Q413.
According to Borealis, Borouge 3 will capture additional feedstock availability resulting from the
upstream refinery and gas processing expansions of Adnoc. Meanwhile, Bechtel was appointed the
project management contractor and the Linde Group was contracted to build Borouge 3’s 1.5mn tpa
ethylene plant, valued at US$1.08bn. The Borouge 3 PP plants will consume propylene feedstock
supplied from oil refineries operated by Abu Dhabi Oil Refining Company (Takreer). Takreer is
doubling capacity of its largest refinery and in 2008 awarded Bechtel a FEED contract for the expansion.
The refinery will have capacity to process an additional 400,000b/d, following the expansion.
Another major upcoming development is the proposed 7mn tpa Chemaweyaat Complex 1, which
includes a 1.5mn tpa naphtha cracker, and aromatics, phenol and derivatives plants at Taweelah, to be
completed in 2013-2014. It is envisaged the complex will be the world’s largest grassroots integrated
chemical project, although by end-2008 no further details were available on the complex’s capacities.
BMI believes it is unlikely that the cracker and related units will be completed before 2014.
Chemaweyaat is to invite bids on an ethane facility in September 2009, with award set for Q210.

Executive Summary .5
SWOT Analysis....7
UAE Petrochemicals Industry SWOT ..7
United Arab Emirates Political SWOT 8
United Arab Emirates Economic SWOT ...8
United Arab Emirates Business Environment SWOT....9
Global Market Overview...10
Global Ethylene Capacities 10
Table: World Ethylene Production By Country, 2008 And 2013 (‘000 tonnes capacity) ....10
Polypropylene.13
Global Oil Products Market Review..16
Table Global Oil Prices, 2003-2013 (US$ per barrel)20
Gulf Regional Overview...21
Table: Announced Ethylene Cracker Projects In The Gulf Region ..23
UAE Market Overview .25
Table: The UAE’s Petrochemicals Sector – Cracker Capacity Data, 2006-2013 (‘000 tpa) ...25
Petrochemicals Business Environment...26
Table: Middle East And Africa Petrochemicals Business Environment Ratings ..26
Limits Of Potential Returns.27
Risks To Realisation Of Returns ...28
The UAE’s Business Environment Outlook..28
Foreign Direct Investment ..30
Industry Trends And Developments ...31
Abu Dhabi..31
Dubai And The Northern Emirates ....33
Developments In Related Industries...35
Table: Major UAE Oil And Gas Concessions...36
Plastics Futures ...37
Industry Forecast Scenario ...38
Table: The UAE’s Petrochemicals Projects.38
Table: The UAE’s Petrochemicals Sector, 2007-201340
Macroeconomic Outlook41
United Arab Emirates – Economic Activity, 2005-2013...43
Company Profiles...44
Abu Dhabi National Oil Company (Adnoc) .44
Abu Dhabi Polymers (Borouge)....46
Abu Dhabi Fertilizer Industries (Adfert).49
Country Snapshot: UAE Demographic Data 50
Section 1: Population50
Table: Demographic Indicators, 2005-203050
Table: Rural/Urban Breakdown, 2005-2030 ....51
Section 2: Education And Healthcare51
Table: Education, 2002-2005 ..51
Table: Vital Statistics, 2005-2030.51
Section 3: Labour Market And Spending Power ....52
Table: Employment Indicators, 2000-2004..52
Table: Consumer Expenditure, 2000-2012 (US$) ..52
BMI Methodology ...53
How We Generate Our Industry Forecasts ..53
Chemicals And Petrochemicals Industry 53
Cross Checks ..54
Business Environment Ratings.55
Table: Petrochemicals Business Environment Indicators And Rationale...55
Weighting...56
Table: Weighting Of Indicators ....56