United Arab Emirates Petrochemicals

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					United Arab Emirates Petrochemicals Report Q2 2012

Published : March 2012                    No. of Pages : 57                        Price:US$1175




Abu Dhabi is on course for massive expansion in its olefins and polyolefins capacities, paving the way for
more product diversification particularly in the propylene chain, according to BMI’s UAE petrochemicals
report.Borouge expects the expansion of its polyolefins complex in Ruwais, Abu Dhabi, to be fully
onstream in mid-2014, following completion of construction by end-2013. In Q112, the Borouge 3
expansion was in the engineering, procurement and construction stage and on track as planned, although
start-up dates for individual units was still unknown. It will add capacities of 1.5mn tpa ethylene,
960,000tpa PP and 1.43mn tpa PE. The project also includes an 80,000tpa cross-linked polyethylene
(XLPE) plant, which Borouge said will be a value-added complement to the 350,000tpa LDPE unit at the
site.

The UAE’s petrochemicals industry will benefit from the rapid expansion of capacities in highly
integrated, state-of-the-art complexes, but will be limited by the narrow product range and lack of
downstream diversification. Key issues going forward are the effect of spreads between naphtha and
ethane and the strength of the Chinese market. While ethane may be cheaper going forward, its heavy
use of naphtha in its feedstock mix will put the UAE in a better position than Qatar and Saudi Arabia to
diversify downstream production. The decline in Chinese imports and narrowing of the petrochemicals
trade surplus is also related to an increase in domestic capacities as the country strives to improve
selfsufficiency.BMI has previously warned that the UAE will face an increasingly competitive Chinese
market and over the medium-term, the trend is likely to continue.

In BMI’s Middle Eastern petrochemicals business environment ratings matrix, the UAE has a score of
63.7 points. It has jostled with Kuwait for third place, but while the UAE has undergone massive
expansion, Kuwait has suffered as a result of policy reversals in the refining and petrochemicals sectors,
which have affected its market risk score, while its overall country risk rating has fallen in line with
global economic trends. This quarter, the UAE remains in second place, 3.1 points ahead of Kuwait and
13.9 points behind the regional leader Saudi Arabia. Whether the UAE retains that position will depend
on its ability to stay ahead of Qatar in country risk ratings, coupled with the expansion of Borouge in
2013 and the proposed Chemaweyaat 1, which is set to bolster its petrochemicals capacities.

UAE Petrochemical Industry

Executive Summary . 5
SWOT Analysis . 6
UAE Petrochemicals Industry SWOT 6
UAE Political SWOT . 7
UAE Economic SWOT ... 8
UAE Business Environment SWOT 9
Global Petrochemicals Overview . 10
Petrochemicals Market Overview 10
Table: World Ethylene Production By Country, 2011 And 2016 (‘000 tonnes capacity) . 10
Financial Results . 14
Table: Financial Results Of Major Petrochemicals Companies, 2010 14
Global Oil Products Price Outlook .. 15
Gulf Regional Overview . 21
Table: Announced Ethylene Crackers In The Gulf Region ... 22
UAE Market Overview 23
Table: The UAE’s Petrochemicals Sector – Cracker Capacity, 2009-2016 (‘000 tpa) 24
Industry Trends And Developments 25
Dubai And The Northern Emirates .. 27
Overseas Investment 28
Developments In Related Industries . 28
Table: Major UAE Oil And Gas Concessions .. 30
Plastic Conversion Industry . 30
Business Environment .. 32
Petrochemicals Business Environment Ratings ... 32
Table: Middle East And Africa Petrochemicals Business Environment Ratings .. 32
Limits Of Potential Returns.. 33
Risks To Realisation Of Returns .. 33
Industry Forecast Scenario ... 35
Petrochemicals Outlook ... 35
Table: The UAE’s Petrochemicals Projects . 35
Table: The UAE’s Petrochemicals Sector, 2008-2016 (‘000tpa, unless otherwise stated) ... 37
Macroeconomic Outlook ... 38
United Arab Emirates – Economic Activity .. 44
Company Profiles ... 45
Abu Dhabi Fertilizer Industries (Adfert) .. 45
Abu Dhabi National Oil Company (Adnoc) . 46
Abu Dhabi Polymers (Borouge) ... 48
Glossary Of Terms . 51
Table: Glossary Of Petrochemicals Terms .. 51
BMI Methodology ... 52
How We Generate Our Industry Forecasts .. 52
Chemicals And Petrochemicals Industry . 52
Cross Checks ... 53
Business Environment Ratings . 54
Table: Petrochemicals Business Environment Indicators And Rationale . 55
Weighting . 55
Table: Weighting Of Indicators ... 56Table: World Ethylene Production By Country, 2011 And 2016 (‘000
tonnes capacity) . 10
Table: Financial Results Of Major Petrochemicals Companies, 2010 . 14
Table: Announced Ethylene Crackers In The Gulf Region . 22
Table: The UAE's Petrochemicals Sector – Cracker Capacity, 2009-2016 (‘000 tpa) . 24
Table: Major UAE Oil And Gas Concessions . 30
Table: Middle East And Africa Petrochemicals Business Environment Ratings . 32
Table: The UAE's Petrochemicals Projects . 35
Table: The UAE's Petrochemicals Sector, 2008-2016 (‘000tpa, unless otherwise stated) . 37
Table: Glossary Of Petrochemicals Terms . 51
Table: Petrochemicals Business Environment Indicators And Rationale . 55
Table: Weighting Of Indicators . 56

				
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Description: Abu Dhabi is on course for massive expansion in its olefins and polyolefins capacities, paving the way for more product diversification particularly in the propylene chain, according to BMI’s UAE petrochemicals report.Borouge expects the expansion of its polyolefins complex in Ruwais, Abu Dhabi, to be fully onstream in mid-2014, following completion of construction by end-2013. In Q112, the Borouge 3 expansion was in the engineering, procurement and construction stage and on track as planned, although start-up dates for individual units was still unknown. It will add capacities of 1.5mn tpa ethylene, 960,000tpa PP and 1.43mn tpa PE. The project also includes an 80,000tpa cross-linked polyethylene (XLPE) plant, which Borouge said will be a value-added complement to the 350,000tpa LDPE unit at the site.