UAE Borouge 3 commercial output seen to hit markets by end-'14

16 May 2014 10:11 Source:ICIS News

Focus story by Muhamad Fadhil

Borouge to start new cracker in few weeks - CEODUBAI (ICIS)--UAE’s Borouge is expected to produce commercially-ready output from its new 1.5m tonne/year ethane cracker and derivative plants in Abu Dhabi by the end of the year, industry sources said on Friday.

Borouge, which is a joint venture between Austria’s Borealis and the Abu Dhabi National Oil Co (Adnoc), built the cracker and derivative units - Borstar polyethylene (PE) units with a combined 1.08m tonne/year capacity; two Borstar polypropylene (PP) units with a combined capacity of 960,000 tonnes/year; and a 350,000 tonne/year low density PE (LDPE) unit - as the third phase (Borouge 3) of its petrochemical project at the site.

“We only expect Borouge to produce product ready for the market by the end of the year. Such large-scale [units] need time to stabilise,” according to a source close to a GCC-based petrochemical supplier.

Expecting on-spec material from the new plants available to the market by end-2014 is “a practical and reasonable timeline”, another industry source said.

Borouge 3 will raise the company’s olefins and polyolefins capacity to around 4.5m tonnes/year from 2m tonnes/year currently.

In late April, Borouge CEO Wim Roels had said that the cracker is expected start-up soon, but declined to provide specific dates. The cracker will be the first to begin operations, and then the derivative plants will start production one after another.

Industry sources said that Borouge has started up the cracker more than a week ago, but this could not be confirmed with the company.

“The new Borouge cracker started up already. The company is running tests and everything looks fine,” a source close to the company said.

As for the derivative plants, start-ups are expected in August, after the Muslim fasting month of Ramadan, industry sources said.

“Operations will slow down during Ramadan. So, we don’t expect Borouge to start up its derivative plants during such a [lull] period,” according to a Middle East PE distributor.

Muslims typically work reduced hours during Ramadan in the Gulf Cooperation Council (GCC) region that will start in end-June.

The GCC comprises the UAE, Qatar, Bahrain, Saudi Arabia, Oman and Kuwait.

Once Borouge 3 products hit the markets late this year, PE and PP prices in the Middle East are likely to come under pressure, industry sources said.

“There is a lot of new output from Borouge. Prices will likely soften in the region once material from Borouge comes out,” a GCC-based end-user said.

PE availability in the Middle East is currently tight and new supply is welcome in the region, according to another buyer.

By Muhamad Fadhil