Bridging the gap with Borouge
Borouge will take the gulf countries to the next level
Borouge CEO, Abdulaziz Alhajri tells Jyotsna Ravishankar that he is keen to take the gulf countries to the next level of being a true manufacturing economy
The Gulf’s conversion industry is one that is waiting to happen. It is the industry that will transform the face of the gulf nations from being a hydrocarbon focused economy to one that focuses on manufacturing.
A litmus test for truly flourishing economies has often been the strength of its manufacturing industries. With regard to the Gulf’s conversion parks, the basic raw material is available and is available cheap, so the time has come for countries to create more value out of every resin produced instead of plainly shipping out precious raw materials to other manufacturing destinations.
It was no real surprise then that the Gulf Petrochemicals and Chemicals (GPCA)’s PlastCon’13 focused on sustaining the growth of the plastic conversion market by creating value across the region’s plastics industry.
The GPCA says that the regional plastic conversion market continues to grow at an impressive rate of for 7.6% which is more than double the global average. This brought the total polymer production capacity of the ‘big five’ high volume plastics categories in the GCC to 23.6 million tonnes per annum by end of 2012.
However, the region still has a long way to go in terms of setting up huge manufacturing industries and the polymer parks are paving the way.
“Out of the 24 million tonnes of polymers we produce here in the GCC, only 4.5 million tonnes is converted locally and we believe that there is a major opportunity here for the convertors to come in,” said Abdulaziz Alhajri, CEO, Borouge and chairman of the Plastics Committee of the GPCA speaking to Refining and Petrochemicals Middle East on the sidelines of the conference. He also said that the governments and federal governments are investing a lot of effort in this regard.
“The governments of all the GCC countries have invested heavily in trying to support the plastics conversion industries. The logistics infrastructure has improved with the Sheikh Khalifa Port and the added infrastructure is going to make it extremely attractive for the conversion industry to thrive and grow here.
This is obviously good for the diversification of the economy. We need to encourage the small and medium enterprises, as they will add real value to our economy.”
Borouge has been making rapid progress as a polymer producer in the UAE and its partnership with Borealis has meant extensive investment in the research and development, and access to new markets like Europe. The company has quite quickly transformed from a small state-owned producer to a multi-national competitor, especially in key markets like Asia.
A recent study released by the Ministry of Foreign trade of the UAE said 41 countries receive UAE exports of plastics worth over $10 million each, with India coming in first place in this regard, receiving $195 million worth of the product from the UAE (11 per cent of the UAE’s overall plastics exports) followed by China, which received $149 million (8 per cent).
The next development in Borouge will be the phase 3 expansion. Speaking about the Borouge 3 expansion progress, the CEO said “it was well on track”.
“There will be an 85% progress on the project by the end of the year and the construction will be completed by 2014 as planned. We are building capabilities and doing the pre-marketing ahead of the start-up, and I am personally very excited with this expansion.”
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He said the challenge at Borouge now was that the company has witnessed unprecedented growth in a span of five years, and employees at every level were coming to grips with this expansion.
“We are also establishing a flexible and fast distribution network, so we can support our customers more efficiently,” he added.
With this expansion, Borouge is building its petrochemical plant at Ruwais in Abu Dhabi from a 2.5 million tonnes per year (t/y) to a total annual capacity of 4.5 million t/y by mid-2014. The project includes an ethane cracker, two polyethylene units and two polypropylene units, as well as a low density polyethylene (LDPE) unit.
Bechtel is providing management support for the implementation of the project.
AlHajri also said that the innovation centre that the company was setting up in Abu Dhabi is almost complete and it was at that stage where the equipment was being put in.
“The centre should be ready for operation in the second half of 2013. When it is ready, it will be an icon for the UAE.”
He believes innovation is an important part of Borouge’s operation, which he says is evident in the number of pipe grades that the company is currently offering. “When we were operating Borouge 1 we had 20 pipe grades, however; today we have 80 pipe grades.”
“We are also looking together with Borealis to tap into the European markets in the future,” he said. But this innovation centre for which we are investing in the UAE is not only for better grades for export but also to support the downstream industry locally, he added.
China will remain a major market for Borouge and the company is investing in logistics hubs in the Asian country. It is also expanding its existing facilities in Singapore.
“We are expanding our compounding facility in Shanghai. This is to support the local automotive industry there, and we have initiated the project to expand the current Shanghai plant from 50,000 tonne capacity to 80,000 tonne capacity within the next two years.”
The wire and cable moulding is one of the unique offerings from Borouge 3, as it will be polyethylene grades that can withstand high pressure and low density.
“As part of the wire and cable moulding offering, we have a cross-linking polyethylene units and this will continue to support our position with Borealis as a world leader in wire and cable offering. We are going be supporting the local industry; for instance, Ducab will be our major customer,” he explained.
The CEO is hopeful and confident all the investment the company and the country are making in the polymer industry will not only generate higher exports, but also create a robust downstream industry in the Gulf.
- 41 countries receive UAE exports of plastics worth over $10 million each, with India coming in the first place in this regard
- 7.6% the Gulf plastics conversion industry growth in recent times
- 80,000 tonnes is the capacity planned for the expanded Shanghai facility of the company that is at 50,000 tonnes currently