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Abu Dhabi National Oil Company has sealed a long-awaited deal to create a $60bn global plastics company after agreeing to combine its petrochemical assets with those of Austria’s OMV.
The new company, called Borouge Group International, will specialise in polyolefins, a group of plastics derived from oil and gas that are omnipresent in modern life — appearing in everything from shopping bags and toys to automotive parts, pipes and buildings.
Adnoc and OMV said Borouge Group International, which they said would have an enterprise value of more than $60bn, would be the fourth-largest polyolefins company, and second-largest outside China.
As the world’s appetite for gasoline and diesel begins to be eroded by the rise of electric vehicles, Middle Eastern oil producers such as Adnoc are diversifying into fossil fuel-derived chemicals such as plastics.
The market for plastics is predicted to continue growing rapidly, and in October Adnoc agreed a €14.7bn takeover of German chemicals group Covestro, the leading producer of polyurethane foam that is used in household appliances and insulation.
“When I started as a young engineer in 2000 in Borouge, we were just building the first 450,000 tonne plant. Today, with this deal, we will be at 13.6mn tonnes. That’s approximately 50 times bigger in 25 years,” said Khaled Salmeen, Adnoc’s head of downstream.
“In the long term, petrochemicals will always replace higher [energy] intensive metals. You see it in your car, you see it in a lot of things around you. If you look at a 1970 car versus a 2025 car, you will see the bumper is no longer metal, a lot of the interior is no longer metal and so on. Plastic is less energy intensive, and more cost-effective,” he added.
Adnoc and OMV said they will each hold nearly 47 per cent of the shares in Borouge Group International, which will be headquartered in Austria and listed in Abu Dhabi. The remainder of the shares will be free float.
The Abu Dhabi side will also buy Nova Chemicals, a leading North American maker of polyethylene, often used in packaging, films and bottles, and add it to the new company.
Nova, which Adnoc and OMV said had an enterprise value of $13.4bn, is currently owned by Mubadala, the United Arab Emirates’ sovereign investor. Meanwhile, OMV will inject €1.6bn of cash into Borouge Group International.
The transactions mark the culmination of on-and-off talks between Adnoc and OMV about combining their chemical divisions — which at one point were less than 24 hours away from a deal in December 2023 before negotiations stalled.
“This deal was both a merger, and an acquisition,” said Salmeen, explaining why it had taken a long time to finalise.
OMV had announced a framework for a deal with Adnoc in July 2023 under which the two companies would combine their chemical divisions.
OMV chief executive Alfred Stern said on Monday the deal would “support OMV’s transformation into an integrated sustainable chemicals, fuels, and energy company”.
After the deal is completed, Adnoc’s stake in Borouge Group International will be transferred to XRG, an entity created by the Abu Dhabi company last year to invest its profits abroad. Board members of XRG include former BP chief executive Bernard Looney.