Adnoc acquires Mubadala's 25% stake in petrochemicals maker Borealis

Deal will allow state oil company to speed up its downstream and industrial growth programme

Adnoc's offices in Abu Dhabi. The investment in Borealis will help the state-owned oil and gas company to expand globally. Courtesy Adnoc

Adnoc is buying Mubadala Investment Company’s 25 per cent stake in Austrian chemicals producer Borealis.

The deal will allow the state-owned oil and gas producer to expand its international footprint in the fast-growing chemicals and petrochemical sector, Adnoc and Mubadala said on Friday.

This is expected to lead to new opportunities in important markets such as Europe and the Americas.

“Globally, the chemicals and petrochemical sector is poised for significant consumer-led growth in the decades ahead,” said Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, and Adnoc's managing director and group chief executive.

“Alongside OMV, Adnoc will be a co-shareholder in Borealis, with this investment giving further impetus to our local and international petrochemical and industrial growth programme, and accelerating our transformation into an integrated and global energy player.”

Upon completion of the transaction, which is subject to customary closing conditions and regulatory approvals, the remaining 75 per cent of Borealis will be controlled by OMV, a Vienna-listed integrated oil, gas and petrochemical company.

The financial details of the transaction were not disclosed by the companies.

In October 2020, Abu Dhabi’s strategic investment arm Mubadala reduced its stake in Borealis to 25 per cent after it sold 39 per cent to OMV in a $4.68 billion deal.

“We have partnered with OMV and Adnoc for two decades to build Borealis into a global champion,” said Khaldoon Al Mubarak, managing director and group chief executive of Mubadala.

“Now the time is right for OMV and Adnoc to take this partnership to the next level, capitalising on synergies with the wider Adnoc portfolio.”

The move to acquire the stake is part of Adnoc’s plans to speed up the delivery of its downstream and industrial growth programme and further expand its long-standing partnership with Borealis.

Borealis, which is based in Vienna, is the eighth-largest producer of compounds such as polythene and polypropylene that find varied uses in packaging, plastics and acrylics industries.

It provides services and products to customers globally, both directly and in collaboration with Borouge, a joint venture with Adnoc.

Borouge is currently going through a large capacity addition as part of Adnoc's plans to boost petrochemical production capacity under its strategy to invest $45bn with partners in the downstream sector.

Adnoc and Borealis signed a $6.2bn partnership agreement in November to develop Borouge's fourth plant. The feedstock for the planned expansion will be supplied by Adnoc.

In January, the companies confirmed that they had started construction of the plant within the polyolefin manufacturing complex in Ruwais.

Borouge will produce polyolefin products such as polythene and polypropylene at the new factory, as well as non-polyolefin products such as benzene and butadiene.

With the addition of the new unit, Borouge could produce enough polyolefins to manufacture pipes to supply water to 35 million households, the company said.

The products will support a wide range of uses and be used in products such as industrial-grade pipes, cables, films and personal protective equipment.

With the operation of the new unit, overall polyolefin output will reach 6.4 million tonnes, making Borouge the largest-single production site for polyolefins.

The plant will complement the local supply chain and meet the projected growth in demand for polyolefins in the Middle East, Africa and Asia, while providing critical feedstock to the Taz’iz Industrial Chemicals Zone in Ruwais, the Abu Dhabi Media Office said at the time.

The UAE plans to triple its petrochemical production capacity from 4.5 million tonnes — currently produced entirely by the Borouge factory — by 2025.

In February, Adnoc and Borealis also announced that they were considering a potential initial public offering of a minority stake in Borouge.

No further details were given, and the two companies said they will provide further material updates “as and when appropriate”.