Sector News

Borealis partners in world-scale petrochemical project in Kazakhstan

March 26, 2018
Chemical Value Chain

Borealis, a leading producer of polyolefins owned jointly by the Mubadala Group and energy group OMV, signed a joint development agreement on Saturday with United Chemical Co. to develop a world-scale petrochemical project at Atyrau, Kazakhstan.

The project will consist of a 1.25-million metric tons/year ethane cracker and two 625,000-metric tons/year, Borstar-process polyethylene (PE) units. Ethane will be sourced locally. A memorandum of understanding was signed at the same time for cooperation on a 500,000-metric tons/year polypropylene (PP) project that is currently being implemented by the Samruk-Kazyna Sovereign Welfare Fund of Kazakhstan. That project is based on Novolen PP technology licensed by CB&I.

The deals were signed in Abu Dhabi by the ministers of energy of Kazakhstan and the United Arab Emirates, in the presence of the president of Kazakhstan, Nursultan Nazarbayev and the Crown Prince of Abu Dhabi, Mohammed bin Zayed bin Sultan al-Nahyan. Mark Garrett, Borealis CEO and Zhenis Osserbay, UCC CEO, signed the agreements. It follows the conclusion of a prefeasibility study for the project, which will now move into the feasibility study phase. The study is expected to run until the first quarter of 2019, at which point a local joint venture (JV) with UCC will be established. A final investment decision is expected in 2020 with start-up in 2025.

The primary target markets are the CIS, but there will be some exports outside the region. The JV will utilize Borealis’s sales and marketing expertise for any exports outside Kazakhstan, and UCC will cover sales within Kazakhstan.

“This project is well aligned with the country’s strategy to develop its petrochemical industry and would serve as a strong basis for establishing Kazakhstan on the global polyolefin market,” said Samruk-Kazyna CEO Akhmetzhan Yessimov at the signing. Garrett added that the project would significantly strengthen Borealis’s position in the CIS markets, which exhibit growth rates above those in Western Europe.

The companies have not disclosed the likely cost of the project but it is expected to reach several billion dollars. The partners are looking into project-financing opportunities.

Borealis says that the Novolen PP technology yields a good range of basic PP grades. “In addition, we can continue to provide Borstar grades from our European locations to the targeted markets,” it says.

The deal is the latest chapter in Borealis’s globalization strategy. The company is a JV partner with Abu Dhabi National Oil Co. in Borouge, a major polyolefins producer that is in the process of installing its fourth production complex, Borouge 4. Borealis has also announced a JV partnership with Total and Nova Chemicals to build a steam cracker at Port Arthur, Texas, and a PE plant at Bayport, Texas. This JV will also own Total’s 400,000-metric tons/year PE plant at Bayport.

By Natasha Alperowicz

Source: Chemical Week

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