The senior vice-president of Abu Dhabi Polymers Park discusses the creation of the final link in the chain from oil field to finished product.
Abu Dhabi Polymers Park (ADPP) is the final building block in the emirate’s ambitious plans for its petrochemicals industry. The company, a subsidiary of Abu Dhabi Basic Industries Company (Adbic), will lease 60-65 plots of land on a 4.5-square-kilometre site within Abu Dhabi Industrial City to manufacturers of finished and semi-finished plastics goods that are made from the raw feedstocks provided by Abu Dhabi National Polymers Company (Borouge) and Abu Dhabi National Chemicals Company (Chemaweyaat).
The park will be the final link in the chain from oil field to finished product, but will also start the process of bringing in international investors while creating jobs and expertise in the region, in line with the UAE’s plans for economic diversification.
Mohamed al-Qamzi, senior vice-president of ADPP, who is in charge of the park’s development, says it is keeping him occupied. “Things are busy right now,” Al-Qamzi tells MEED. “My calendar is pretty full.”
The attention to detail Al-Qamzi is giving to the development means that over the course of a typical week he will have discussed the recycling of plastic waste with Borouge, new petrochemicals ventures with Adbic, and met with potential international investors in the venture, while overseeing the day-to-day development of the park.
Where Abu Dhabi’s other petrochemicals projects such as Chemaweyaat and Borouge are largely funded by government entities, ADPP’s role is to create an attractive investment environment for local and international companies - a key focus of the government’s development plans for the sector.
The company was very much borne out of the Abu Dhabi 2030 vision for the development of the economy, which was unveiled in 2007, says Al-Qamzi.
“ADPP has a very clear role to play in the Abu Dhabi 2030 economic vision,” he says. “We took the government’s mandate to develop industry further downstream, to create added value to the raw materials that are already available.
“By 2030, we need to diversify our GDP [gross domestic product] away from the oil and gas sector so that other sectors are generating about 64 per cent of the total, and we will be playing our part in achieving that target.”
Bringing plastics manufacturers to the region will not just boost investment in the emirate, says Al-Qamzi. It will also create ready-made demand for Abu Dhabi’s petrochemicals products.
“Ours is a very strategic role,” says Al-Qamzi. “At the same time as developing new industries, we will serve the upstream by creating a business hub, which itself creates demand for producers like Borouge and Chemaweyaat.”
By Al-Qamzi’s estimates, the park will reach full occupancy by 2015, at which point it will be producing about 1.4 million tonnes a year of plastics. “In total, with investors coming in, and the infrastructure we are building ourselves, we estimate that the total investment in the park by 2015 will be around $4bn,” he says.
However, attracting investors is more than just a matter of bringing in producers and manufacturers, says Al-Qamzi. ADPP will offer as full a range of options as possible to transport the finished goods for export, and bespoke services to its tenants.
“We need a full logistics chain that covers railways and inland transportation,” he says. “A port facility might also be created within the area to support the park. The new port facilities at Khalifa will play a big role, and in addition, our sister company [Adbic sub-sidiary] Zonescorp is conducting a feasibility study for a logistics city to be built within the Abu Dhabi Industrial City.
“About 60 per cent of the output for the park will be for export, and that will need transportation to its final destination.”
A study conducted jointly by ADPP and Denmark’s Maersk on how to best develop the park’s logistics operations has just been completed, and further developments are expected.
“We have completed the study and are in discussions with a global logistics provider to create a joint venture, which will be announced soon,” says Al-Qamzi.
One of the big selling points for the park is the economies of scale it will offer once it reaches full occupancy. ADPP will be able to act as an intermediary between producers and sellers, buying in bulk at competitive prices and distributing the basic polymers to each manufacturing unit according to its needs.
“We are still working out exactly where the feedstocks for the plants will come from,” says Al-Qamzi. “Once the polymers park starts to fill up and the volume we process increases, we will be able to speak to the petrochemicals producers about the volumes we are producing and where we can find a mechanism for price negotiations so that we have raw materials at a very competitive price. The government will play a big role in supporting the development of the industry throughout the chain and deciding how contract mechanisms are set.”
The generous benefits available to companies in the UAE’s free zones, such as 100 per cent repatriation of capital and profits, will be applicable. To promote local investment, ADPP is also offering a match-making service, introducing Abu Dhabi-based firms to major international companies and encouraging joint investments.
ADPP is also studying selective joint ventures of its own with foreign partners, and is considering setting up a standalone plant to manufacture semi-finished goods, which can then be used by small-to-medium-sized enterprises (SMEs) that want to enter the industry, but would not otherwise have the facilities to do so.
“We are already in discussions with the [state-run] Khalifa fund on how we can create this kind of development, and play a big role with the development of the SMEs,” says Al-Qamzi. “We would go into the manufacturing side of things on semi-finished products and allowing the SMEs to develop things further downstream.”
According to Al-Qamzi, the benefits the park offers have already attracted strong interest from international investors, with the company noting little effect from the current economic downturn.
“Today, I can happily say that we have almost 30 per cent of the land allocated and lease agreements in the process of being signed,” he says. “We have signed our first official lease agreement, which will be announced later on. About 12 more companies are in the final stages of wrapping up the agreements and the next wave of companies are already queuing up.”
Nevertheless, the company is keeping a close eye on investors, and is prepared to help out wherever possible to ease developments through the downturn.
“We do not have a say on the circumstances today in the market,” says Al-Qamzi. “It is a challenge. We trust that our tenants are capable of executing their business, and we have to give them our full support. We make sure that things run as smoothly as possible, and that any barriers to investors coming to the park are gone.”
Al-Qamzi says the benefits the park offers, and the fast-track process for investors setting up in Abu Dhabi, make the process relatively pain free. “Availability of land, utilities, infrastructure, and the speed of the process of setting up the business - it is all there,” he says.
“We make sure that the process goes as smoothly as possible. We try to remove any bottlenecks to investors coming into the park.”
The development is not just planned to bring investors in and create demand. Al-Qamzi says it will generate revenues in its own right. “One of the revenue generators will be the land lease,” he explains. “Other revenue will come in through joint ventures. Then there is technical services and business support. On the raw materials side of things, we believe we will be able to act as a trader, which will also generate cash.”
Al-Qamzi says that one of the toughest challenges the development faces is explaining the concept of the polymers park to investors, especially local manufacturers with entrenched business practices.
“The main difficulty is the same as anything new that has not yet been proven yet,” he says. “We need manufacturers to understand the concept. A lot of manufacturers in the UAE have been around for 25-30 years, and are adjusted to certain systems. What we are offering is something new to them.
“We have to tell them to forget anything related to the supply chain and logistics because we will take care of that. We need the right understanding of the park, and to make sure we communicate our message to the right people.”
Similarly, the benefit needs to be explained to petrochemicals producers upstream.
“Rather than export commodities left and right, they need to understand that the downstream infrastructure is here,” says Al-Qamzi. “We need the producers to look at us as a way to develop their business, as another step in the supply chain.”
Already, the emirate’s petrochemicals producers are taking note. “Chemaweyaat’s chief executive officer has told us that the company is already talking about the polymers park in its investor presentations,” says Al-Qamzi. “It says the park is one of the keys to the success of its business.”
Looking ahead, there is scope for the development of similar projects, with schemes growing organically along with the upstream industry.
“It is definitely at the back of our minds,” says Al-Qamzi. “We have created something that is not just a one-off. We are looking at how, as a concept, a specialised cluster, it can work again. So far, we have heard from top players in the market that they are very impressed with what we have developed so far, and that is good enough for me. It lets us know that we are going in the right direction.”
Al-Qamzi says he is taking a rational approach to future developments, however.
“We are looking at all sorts of possibilities but we first need to lay the groundwork and look at the outcome and then ask how we can drive these things forward,” he says. “We are not in the business of just saying we are going to do things. We need to do them.”
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