FIVE months after they formed a partnership, Abu Dhabi National Oil Company (ADNOC) and Copenhagen-based Borealis are getting down to the serious business of putting together a billion-dollar petrochemical project. With the signing of the final joint venture production agreement imminent, the partners have already completed much of the groundwork for the 450,000- tonne-a-year (t/y) polyethylene plant at Ruwais. They are now looking forward to the next phase - the actual implementation.
'The most important thing now is to get the project up and running,' says Olav Aas, who was recently-appointed as chief executive of the ADNOC/Borealis joint venture. 'The project office is established, as is the organisational structure. The PMC tender is under evaluation and we expect to make an award by the end of the year.'
The Ruwais plant will be ADNOC's first foray into petrochemicals. It also marks an important step for Borealis as it expands its petrochemical business beyond Europe. Borealis - a joint venture of Norway's Statoil and Finland's Neste - is the largest polyolefins producer in Europe, but has only limited activities elsewhere. It has a strong marketing presence in Asia, but Ruwais will be the first production centre in this fast-growing market.
Borealis was chosen in mid-June as ADNOC's foreign partner in the 60:40 venture. A month later, it was confirmed that the Scandinavian company would also be ADNOC's partner in the associated, but separate, 50:50 marketing venture. Both appointments were quite a coup for Borealis. Viewed as the dark horse throughout the 18-month selection process, the company came up on the rails to win the race against powerful competitors from Europe and North America.
Under the outline agreement reached with ADNOC for the production joint venture, Borealis will supply its Borstar technology for the high density and linear low density polyethylene plant. 'Borstar is a very flexible technology,' Aas says. 'It is a bi-modal, two-reactor technology, which gives very good product properties. That is one of its strengths.'
Borstar is a development of Borealis' previous high density polyethylene (HDPE) technology, which has been operating in Belgium since the early 1990s. 'Borstar has been tested extensively on pilot projects and for the past year has been in commercial production on a 120,000-t/y Borealis plant in Finland. In that respect, it is a new technology and definitely one for the future,' Aas says.
At Ruwais, the ADNOC/Borealis venture intends to build two polyethylene units based on the Borstar technology. The units will have a capacity of 225,000 t/y and be almost identical. They will each be considerably larger than the one already in operation at the Finnish plant. Nevertheless, Aas envisages no problems in up-scaling the technology. 'Up-scaling has been done before,' he says. 'It needs experience, which we have. It also requires large enough equipment to handle the additional volumes. That equipment is now on the market so we don't see any problems on that front.'
The polyethylene units are expected to take two years to construct and be operational by mid-2000. Under the proposed schedule, a list of prequalified contractors - which has still to be finalised - will be issued with tender documents for the engineering, procurement and construction (EPC) contract in the second half of 1997. The successful PMC contractor will be involved in drawing up the front-end engineering and designs (FEED) and the tender packages.
The polyethylene units will be supplied with ethylene from an ethane cracker, which will receive its ethane-rich tail gas feedstock from Abu Dhabi Gas Industries Company (Gasco). Originally, the capacity of the cracker was expected to be 450,000 t/y. However, the joint venture is now looking to increase its size to 600,000-750,000 t/y.
Part of the rationale for the increase is that it will allow the company to take advantage of better economies of scale. In addition, there is a practical motivation. If ADNOC decides to proceed with a proposed ethylene dichloride (EDC) plant at Ruwais, the national oil company will require ethylene feedstock, which will be supplied by the new production joint venture. A final decision on whether to proceed with the EDC plant is expected soon; then the actual capacity of the ethylene cracker can be decided.
One of the first tasks for the PMC contractor will be to prepare the tender documents for the ethylene portion of the project. Five-six ethylene licensors will be invited to bid for the package, which will cover technology supply, the FEED and the EPC work. The three-year contract is expected to be tendered in the first quarter of 1997, with a contract award set for the following autumn.
The next step is to sign the final joint venture agreement for the production company. 'The important points have been agreed and clarified. The signing should take place by the end of the year,' says Aas. A similar accord for the marketing company will come later.
The joint venture currently has 10 people working on the project, but the team will be expand greatly in the months ahead, once bidding starts on the various construction packages. 'Once the PMC contractor comes on board, the team's manpower will increase significantly,' Aas says. 'As for the new joint venture company, it will grow more slowly. Significant numbers will only be taken on in the year prior to the plant's start-up in mid- 2000.'
The ADNOC/Borealis joint venture will play a central role in Abu Dhabi's plans to develop its petrochemical capabilities. The polyethylene plant is set to be the platform for a range of other downstream petrochemical industries, which will not only give the emirate a position in the global market, but also advance ADNOC's long-term ambition of becoming a fully integrated oil and gas company.
You might also like...
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.