Until recently, Abu Dhabi’s petrochemicals industry has been dominated by Abu Dhabi National Oil Company (Adnoc) and the International Petroleum Investment Company (Ipic), both of them government-owned.
Now, however, a third state-owned firm, Abu Dhabi Basic Industries Company (Adbic), plans to enter the fray. It may find that the market is too small for all three to prosper, at least in the short term.
Adnoc and Ipic already work together on the emirate’s two existing petrochemicals projects.
The first, Borouge, is a joint venture of Adnoc and Austria’s Borealis, in which Ipic holds a 64 per cent stake. Borouge plans to produce 4.5 million tonnes a year of plastics by 2014.
Adnoc and Ipic are also the chief shareholders alongside Abu Dhabi Investment Council in the emirate’s second petrochemicals producer, Abu Dhabi National Chemicals Company (Chemaweyaat), which is planning a hugely ambitious $10bn petrochemicals complex at Taweelah.
Besides funding, what determine the success or otherwise of petrochemicals projects are the cost and availability of feedstock and the demand for their products, which, in turn, is largely predicated on consumer demand.
Given that Borouge and Chemaweyaat are both partly owned by Adnoc, feedstock will not be a major issue for existing projects.
But global demand has been poor of late, and the Adnoc/Ipic team is likely to resent another local company trying to take a slice from the shrinking pie.
Funding may also become an issue. Sources close to the emirate’s government say that it may have to cut back on some schemes over the next two years because it has to divert funds to bail out neighbouring Dubai.
How Adbic’s petrochemicals venture will fare remains to be seen, but it is far from an ideal time to join the market.