Borouge 2 to test rivals’ strength by offering low prices for its plastics and chemicals

10 March 2010

Abu Dhabi Polymers Company (Borouge) is free of debts and is capable of offering low prices unlike its global competitors

They never had it so good. Between 2004 and 2008, petrochemicals producers across the globe saw prices and demand spiral on the back of a sustained economic boom.

The boom years created some of the biggest listed companies in the world, but in 2010 petrochemicals firms are more likely to be fighting for survival as demand falls, dragging prices down with it.

The good times will also have a lagging impact on supply. In fact, plans for new plants made during the industry’s most successful period may well cause some of the leanest years yet for producers.

In May, Abu Dhabi Polymers Company (Borouge) will start commissioning a new petrochemicals complex at Ruwais, Borouge 2, which is based around one of the world’s biggest ethane crackers.

The plant was designed in 2006 and contracts to build it were awarded in 2007.

It is among a raft of projects that will come online this year, when demand will have fallen to levels not seen since the projects were first planned. For most projects, this will be a major problem. But producers such as Borouge, this will not be an issue because the company is supplied with ethane gas at preferential prices by Abu Dhabi National Oil Company, a 60 per cent stakeholder in the firm.

The Borouge plant also uses advanced technical processes, and will outstrip plants in Europe and the US in terms of both quality and efficiency.

While Borouge 2’s inauguration may come during a tough time for producers, the company is free of the debts that lumber many of its international rivals and is capable of offering low prices for its plastics and chemicals.

It is during the tough times, rather than the boom years that companies prove themselves and the plant’s commissioning will test the strength of its rivals’ business models as much, if not more, than its own.

A MEED Subscription...

Subscribe or upgrade your current 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.

Get Notifications