Adnoc and OMV to complete $60bn joint venture

Abu Dhabi National Oil Company (Adnoc) and Austria’s energy group OMV expect to close a deal to create a global chemicals joint venture by the end of March, the companies said in a statement on Thursday.

The tie-up, which was first announced in July 2023, will combine Abu Dhabi-listed Borouge and Europe’s Borealis. It will also involve the acquisition of Nova Chemicals to form Borouge Group International (BGI).

Adnoc will own 25 percent of Borealis, with OMV owning the rest. Borouge will be owned 54 percent by Adnoc and 36 percent by Borealis. Both entities will operate under the BGI umbrella. 

The $60 billion venture will be the world’s fourth largest by nameplate production capacity.

BGI will also acquire Canada’s Nova Chemicals from Abu Dhabi’s sovereign wealth fund Mubadala for $13.4 billion, including debt, to expand its business in North America.

Adnoc and OMV also signed an asset usage agreement for Borouge 4, allowing BGI to operate and sell products from the new polyolefins plant. 

The agreement is estimated to generate $400 million in net profit over the next three years, the statement said.

Borouge 4 operations are expected to increase throughout this year, but BGI will not buy the facility outright from Adnoc and OMV until at least 2029.

The companies said they expect BGI to receive investment-grade credit ratings from S&P, Moody’s and Fitch.

Further reading:

• Adnoc and OMV seal deal for $60bn chemicals JV
• OMV to profit from Borouge-Borealis merger with Adnoc
• Proposed Adnoc-OMV entity targets Mubadala unit

A proposed tender offer to convert existing Borouge shares into BGI shares is likely in 2027, subject to market conditions and approval by the UAE’s Capital Market Authority.

Until then, BGI will be privately held while Borouge will remain listed in Abu Dhabi and pay its planned annual dividend. BGI will maintain the dividend payout post completion of the planned tender offer.

Borouge closed 1.6 percent higher at AED2.55 on March 18, down 3 percent so far this year.

The UAE’s oil and gas infrastructure has come under fire from Iran after the US and Israel struck Tehran on February 28. Iran has since targeted oil and gas facilities across the GCC.